Transport subsidy to spur Maharashtra mills' output

The Maharashtra Government's decision to provide a transport subsidy of Rs 3/tonne on cane moved every km beyond 50 km is likely to boost sugar production in the State by roughly 3 lakh tonnes (lt).

“We were earlier estimating that only 775 lt of the 800 lt cane available for the 2010-11 season (October-September) would get crushed. The subsidy will ensure that the entire 800 lt would be processed, leaving no uncrushed standing cane,” said Mr Prakash Naiknavare, Managing Director, Maharashtra State Cooperative Sugar Factories Federation.

The State Cabinet's decision on Wednesday will basically facilitate movement of surplus cane from southern and western Maharashtra to the Marathwada region, where mills are currently saddled with excess crushing capacity.

“Today, we have a situation of factories in Satara, Sangli and Kolhapur being in no position to crush all the cane in their area. On the other hand, there are mills in Nanded, Latur, Beed, Parbhani and Osmanabad that have built sizeable capacities, but have no sufficient cane to process,” he noted.

The subsidy would be a win-win situation for cane growers in southern/western Maharashtra and mills of Marathwada. It may, however, not be so for the State Government, which will shell out Rs 3 on each tonne of cane for every single km beyond 50 km.

Thus, a factory in Latur sourcing cane from Sangli, which is about 275 km away, would be entitled to a subsidy of Rs 675 a tonne. This is as against an ex-field grower's cane price of Rs 2,000 a tonne in the southern districts (Satara, Sangli, Kolhapur), Rs 1,850 in the western belt of Pune, Ahmednagar and Solapur and Rs 1,750 a tonne in the rest of the State.

The subsidy is to be effective from March 16. “The timing is good because in the 2006-07 season (the last time a similar subsidy was granted), it was effective only from April 15 and at a rate of Rs 2/tonne/km,” Mr Naiknavare told Business Line.

During the ongoing 2010-11 season, mills in Maharashtra had, as on Wednesday, crushed 562.06 lt of cane and produced 62.54 lt of sugar at an average recovery rate of 11.13 per cent. In the same period of 2009-10, they crushed 462.5 lt and produced 52.57 lt of sugar at an average 11.37 per cent recovery.

“For the whole season, we were till now expecting to crush 775 lt or thereabouts, which would have yielded 87-88 lt at 11.25 per cent recovery. But with the latest decision, we will probably cross 800 lt, resulting 90 lt-plus of sugar”, added Mr Naiknavare.

The entire 2009-10 season saw Maharashtra mills crush 613.90 lt of cane and produce 70.67 lt of sugar at 11.51 per cent average recovery.