The Hindu Business Line : Sugar sector sees record output next season

`Sweet' prospects
Sugarcane coverage up in almost all parts of the country.
Cooperative mills gearing up to export sugar.
Centre relaxes rules allowing mills without obligation to export.

Chennai , April 10

The area under sugarcane has increased significantly this year, leading to hopes that sugar production could touch a record 220 lakh tonnes next season starting October.

According to industry players, a good water storage position, demand for sugar and expanding export market are the factors encouraging increased planting of sugar this year.

Thanks to good prices this season, the mills have made timely payments to farmers. More than that in places such as Uttar Pradesh, the farmers have been paid more than the State Advised Price (SAP) of Rs 115 and Rs 120 a quintal based on quality. These factors have weighed in favour of farmers going in for sugarcane planting.

HIGHER PAYMENT

This season, sugarcane farmers got at least Rs 10 higher than SAP in view of stiff competition among mills to get cane for crushing.

"We can easily touch 220 lakh tonnes in sugar production going by feedback from various quarters. However, as of now we can only term it as guess-estimate," said Mr S.L. Jain, Director-General, Indian Sugar Mills Association.

According to Mr Jain, there has been rise in sugarcane coverage in almost all parts of the country. "For example in Bihar, there is 33 per cent rise in area under sugarcane," said Mr Jain.

MAHARASHTRA SCENARIO

Mr Prakash Naiknavare, Managing Director, Maharashtra State Cooperative Sugar Factories Federation Ltd, said going by sowing in the western State, sugarcane production was likely to be over 600 lakh tonnes against 430-435 lakh tonnes this season. "At a 11.5 per cent recovery rate, Maharashtra sugar production next season will be 69 lakh tonnes," he said.

"It is likely that the all-India production can touch 220 lakh tonnes," he said.

The hopes of a higher sugar production are against current season's projection of 185 lakh tonnes. Experts are, however, divided over the exact production this season. Mr Jain said this season's production was likely to touch 190 lakh tonnes. Last season's production has been put at 130 lakh tonnes.

In view of good sugarcane crop this season, crushing was still on in some parts of the country, Mr Jain said. "It could go on for a couple of weeks," he said.

Mr Naiknavare said crushing was coming to an end in Maharashtra and could continue for a week more.

ISEC shipment to Pak

Meanwhile, the first shipment of Indian Sugar Exim Corporation (ISEC), a joint export body of private and cooperative mills, to Pakistan has set sail for Karachi. "It is an 18,000 tonnes consignment. We have lined up three more ships and we will export all the contracted one lakh tonnes to Pakistan in 45 days," Mr Jain said.

ISEC had won two 50,000 tonnes tender at prices ranging between $473 and $478 a tonne.

NOT BIDDING

However, ISEC has not bid for the latest tender floated by the Trade Corporation of Pakistan to buy another 50,000 tonnes.

"We don't have advance licence to export further," he said.

Currently, the Centre allows sugar exports only by mills that have an obligation to ship against import of raw sugar during the last two years. Raw sugar was imported then as domestic production slid on drought.

Almost two lakh tonnes of sugar contracted for export since October have been under this route only and the industry now hopes that exports could touch six lakh tonnes this season.

Mills that export sugar through ISEC are deemed to have met their obligations.

Rules relaxed

The Centre has now come forward to relax the rules and allow exports by mills that do not have export obligations. However, these shipments can be channelled only through State Trading Corporation, which has been allowed to export three lakh tonnes sugar.

"Cooperative mills are looking at STC to export, while we on our own are gearing up to ship sugar abroad," Mr Naiknavare said.

Currently, white sugar in London is quoted at $457 a tonne f.o.b. On Monday, sugar futures looked up with prices for May delivery rising to $458 a tonne.

In the domestic market, S-30 sugar is ruling firm at Rs 1870/1925 a quintal, while M-30 at Rs 1,910-1965.