Sugar production in the first two months of the crushing season has fallen to less than half in comparison to last year, as late monsoons delayed crushing operations in western India. However, a slight increase in sugar prices has also resulted in lower payment arrears to sugar farmers.
The sugar marketing season runs from October to September each year. According to data from the Indian Sugar Mills Association, the country’s total sugar production was 18.85 lakh tonnes until November 30. At the same point last year, sugar production had reached 40.69 lakh tonnes. However, only 279 mills are crushing sugarcane at this point, in comparison to 418 factories last year.
The biggest delays come from Maharashtra, where crushing operations did not even begin until November 22 this year. On November 30, only 43 mills had started crushing operations in the State in comparison to 175 mills last year. The State’s sugar production was only 67,000 tonnes, a steep fall from the 18.89 lakh tonnes produced by the State at the same point last year.
Late monsoons and excess rainfall also delayed crushing operations in Gujarat and Karnataka, which also have lower production rates this year. In Uttar Pradesh, on the other hand, production has increased. So far, the State has produced 10.8 lakh tonnes in comparison to about 9 lakh tonnes last year, ISMA data showed.
A series of bumper harvests, increasing acreage and productivity have resulted in production vastly overshooting domestic demand causing a crash in retail prices. Last year, India produced almost 332 lakh tonnes of sugar against domestic demand of only 246 lakh tonnnes. Only 38 lakh tonnes were exported as global prices were also low. At the beginning of this marketing season in October, mills were already sitting on a carry-over stock of almost 146 lakh tonnes of sugar.
The surplus stocks and low prices coupled with hikes in the minimum support price to cane farmers – an important vote bank in several States — had also resulted in soaring payment arrears, with many farmers waiting over a year for payment as mills racked up dues of more than ₹25,000 crore.
This year, the lower production has pushed up sugar prices slightly to ₹31-33 per kg (ex-mill prices). According to government data, payment arrears to cane farmers were about ₹5,000 crore on November 30, in comparison to ₹8,000 crore at the same point last year.
