INDIA: 122 Maha mills close due to cane shortage

Published: 02/17/2017, 9:30:42 AM

As many as 122 sugar mills have completed crushing operations in Maharashtra for the sugar season of 2016/17 and barely 28 mills are now crushing cane. Around 150 mills had participated in the crushing operations this season, according to the latest crushing report of the Maharashtra Sugar Commissionerate, according to India's Financial Express newspaper.

This is perhaps among the shortest crushing seasons in the state with shortest season reported in 2008/09 when the season barely lasted 80 days. This time, although the season may not be as short, it is likely to last for some 100 days, top officials of the Maharashtra Sugar Commissionerate said, adding that the mills are shutting down soon due to the lack of cane availability.

Last year, only 44 factories had shut operations same time. Mills in Maharashtra have so far crushed some 35.667 million tonnes of cane to produce 3.97 million tonnes of sugar at a recovery rate of 11.4%. Last year, around 58.0 million tonnes of cane was crushed to produce 6.3463 million tonnes of sugar for the season at a recovery rate of 10.94%.

Of the 40 mills in Kolhapur region, the biggest sugar belt in Maharashtra, 23 mills have already shut down while in Pune region, 43 of the 52 mills have completed crushing operations. In Ahmednagar, 22 of the 23 mills have shut down already while all the 17 mills in Aurangabad region have completed crushing for the season. In Nanded region, around 11 of the 11 mills have finished crushing.

Facing a cane shortage and a scramble among mills for cane, most mills may be forced to put up with losses to the tune of INR150 (US$2.09)-INR200 per tonne this season. Overall the cane shortage in the state is to the tune of 31-42% as compared to the last season and mills in Maharashtra and Karnataka are likely to face losses. According to market reports, the government is likely to allow the import of some 1.5 million tonnes of sugar. According to industry observers in Maharashtra, with sugar prices crossing the INR40 per kg mark, mills in the state want the government to remove the 40% import duty on the commodity.

They have also asked the government to allow import of one million tonnes of raw sugar under the advance licence scheme and give them 36-48 months to meet the obligation to export refined sugar against the six months now. In the latest sugar season beginning October 2016 and till January-end, Maharashtra produced 3.7 million tonnnes of sugar against 54.0 million tonnes in the same period last year. Karnataka's output was down 25% at 2.0 million tonnes (2.7 million tonnes).

Earlier, the Bombay Sugar Merchants Association (BSMA) has sought to draw the attention of the Centre to the to the probable demand and supply mismatch that is about to come in the sugar market given the drought situation in cane growing areas of Maharashtra and Northern Karnataka.

The Association has urged the Centre to take steps to ensure that prices remain in check. It has suggested duty free imports to boost production as well and ease prices.