Sugar output in Tamil Nadu is set to remain at lacklustre levels with sugarcane acreages and sugar recovery continuing to languish well below peak levels, according to industry representatives.

Percentage of sugar recovery per tonne of cane also continues to rule low either due to drought or un-seasonal rains. Against normal recoveries of close to 10 per cent in the State, sugar mills witnessed a recovery of about 8.8 per cent in 2009-10 and in the current year it continues below 9 per cent.

Going by indications of sugarcane planting in February and March, the 2011-12 sugar season (October-September) could see a 5-10 per cent increase over the current year's anticipated sugar production of about 15-16 lakh tonnes. Last year (2009-10), sugar output was about 12.5 lakh tonnes, according to the Southern Indian Sugar Mills Association – Tamil Nadu.

This is against a peak production of about 26 lakh tonnes in 2006-07 when mills were stretched to capacity. Since then sugar mill capacities have increased particularly in the private sector as mills expanded rapidly to conserve sugarcane command areas and hasten sugarcane crushing to increase efficiency and sugar recovery with a shortened season.

New entrants

There have also been new entrants to the field. Sugar mills in the State have a capacity to produce about 30 lakh tonnes of sugar while sugarcane availability is at just about half its crushing capacity.

Of the 46 sugar mills in the State, 28 are in the private sector and 18 in the cooperative and public sectors. This includes new entrants in Tamil Nadu such as Empee Sugars and Dhanalakshmi Srinivasan Sugar Mills. One mill, SV Sugars, which was not in operation last year has commenced operations under a new management, and one unit in the cooperative sector, the Madurantakam Cooperative Sugar Mill, which had remained closed for over a decade, has also started operations. At least 43 mills will be in operation in the current season against 37 in 2009-10.

One more private mill, of the Bannari Amman group, is expected to go on stream this in October, officials say.

Labour costs

Industry representatives blame shortage of harvest labour and the steep increase in labour costs (which eats into farmers' margins) for sugarcane output remaining low. For the 2010-11 season the State Government has announced a support price of Rs 2,000 a tonne including Rs 100 transport cost linked to a sugar recovery of 9.5 per cent. This is twice what farmers received just three years earlier.

But harvest labour costs Rs 400-500 a tonne, which is twice that of in the North, according to officials.

According to Sugar Department officials, planting up to February-March was about 2.5 lakh acres in the State.

From the third largest sugar producer in the country, after Uttar Pradesh and Maharashtra, Tamil Nadu has conceded its position to its neighbours Andhra Pradesh and Karnataka where acreages continue to gain ground, say SISMA representatives.

Even Gujarat, which was one of the smaller sugar producing States, is expected to produce about 17 lakh tonnes. This has happened despite sugarcane prices doubling to Rs 2,000 a tonne over the last three seasons.

While sugar mill representatives concede farmers are facing a steep increase in costs, sugar prices are making it unviable for mills to increase cane costs.

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