Unsold quota and record inventory lying with sugar mills are expected to burden Maharashtra’s sugar sector more than its counterpart in Uttar Pradesh. Millers of Maharashtra have recorded almost 40-50 per cent lapse in month-to-month sales quota, which would see the state starting the next season with around 60 lakh tonnes of unsold stock.
Inventory wise, mills in Uttar Pradesh are on a better position as most have either fulfilled their monthly quota or have over sold their quota by a slim percentage.
Since the start of the 2020-21 sugar season, mills in Maharashtra have been struggling to fulfil their monthly sales quota. In want of sales, mills took to selling sugar below the minimum selling price (MSP) of Rs 3,100/quintal, which added to the problems of the sector.
Prakash Naiknavare, managing director of the National Federation of Cooperation Sugar Factories Limited, said the sales problems have been plaguing Maharashtra since past three seasons.
“Introduction of Co 0238 variety of cane gave a huge boost to Uttar Pradesh’s sugar industry, which has gone to capture Maharashtra’s traditional markets in northeast India,” he said.
Maharashtra’s industry had always produced more than its captive consumption so mills had to sell in other states. Neighbouring states like Karnataka and Gujarat have their own sugar industry, thus, the northeast India was a good option for millers from Maharashtra.
However, this advantage has long gone as Uttar Pradesh enjoys the distance advantage, which allows the mills to sell their sugar at a lower cost than Maharashtra. Another development that has gone against the industry of Maharashtra is the decision of the Uttar Pradesh sugar sector to sell their superior M-grade sugar at par with the S-grade sugar, which is produced in Maharashtra.
“M-grade sugar has larger grain sizes so normally such sugar commanded a higher price than the S-grade sugar. However, that advantage is now gone,” Naiknavare said.
As a result of this, Maharashtra is set to start its season with unsold stock of 60 lakh tonne of sugar. Nationally, the sugar industry is placed at a comfortable position with an opening stock of 90 lakh tonnes, Naiknavare added.
The country on the whole had seen production of around 300 lakh tonnes of sugar with record exports of around 65-70 lakh tonnes. For the next season, the industry is expected to produce 310 lakh tonnes of the sweetener with 30 lakh tonnes being diverted towards production of ethanol.