Stating that the ex-mill sugar prices in the country have remained in the range of Rs 31-33 per kilo for the last several months, the industry body Indian Sugar Mills Association (ISMA) said that to maintain liquidity of funds, mills have been under pressure to sell sugar at low prices, which is not enough to be able to generate adequate funds to be able to pay the full FRP to cane farmers.
“The cane farmers and sugar mills are hopeful of the much-awaited announcement by the Government of India, regarding the increase in MSP of sugar, as a measure to improve revenue realization of mills and payment to farmers,” it said, adding that under the current circumstances, the increase in minimum selling price (MSP) of sugar from the current level of Rs 31 per kilo, which was last fixed in February 2019, seems to be the only realistic way to ensure that mills improve their cash flows and can effectively reduce the cane price arrears of farmers faster.
A task force constituted by Niti Aayog on sugarcane and sugar industry did recommend a one-time increase of Rs 2 per kg and in June last year, food secretary Sudhanshu Pandey had said the government was considering a proposal to increase the MSP of sugar. But since then, no formal announcement has been made.
The sugar mills across the country have produced 303.60 lakh tonnes of sugar till May 15 in the ongoing 2020-21 marketing season, which is up by 14.43% from the 265.32 lakh tonnes produced during the same period last year.
According to ISMA, the country’s largest sugar producer — Uttar Pradesh, has produced 108.70 lakh tonnes of sugar, which is, however, nearly 11% lower than the 122.28 lakh tonnes produced by it last year on the corresponding date.
As many as 99 mills out of 120 operated this year in the state have closed for the season, while 21 are continuing their operations, compared to 46 mills which were operating on May 15 last year. According to ISMA, operations in the mills in the western region of UP got prolonged by a few days as most of the gur and khandsari units closed their operations due to lockdown restrictions, due to which some of the cane that would have gone to them, got diverted to the sugar mills.
Maharashtra, the country’s second-largest sugar producer, on the other hand, has produced 106.16 lakh tonnes of sugar, compared to 61.35 lakh tonnes produced in the 2019-20 sugar season. While 185 mills have already closed their crushing operations in the State, 5 sugar mills are still operating.
In Karnataka, all the 66 operating sugar mills have already closed their crushing operations by the first week of April, has produced 41.67 lakh tonnes of sugar. During the corresponding period last year, the mills had produced 33.82 lakh tonnes of sugar.
According to ISMA data, mills are estimated to have sold 15.26 million tonnes of sugar in the domestic market till April in the current marketing season, against the government fixed quota of 14.7 million tonnes. In the case of exports, ISMA said mills have contracted to export 5.7 million tonnes of sugar so far, which is 95% of the 6 million tonnes of the export target fixed by the government for the ongoing season.
Out of this, over 3.7 million tonnes of sugar has been physically exported out of the country during the January-April period of this season. Another 7-8 lakh tonne of sugar is in pipeline to be physically exported this month, it added.