Mills Unlikely To Crush Full Cane This Season

PUNE: Despite sugarcane crushing expected to continue till early June, the state’s sugar commissionerate expects between 8 lakh tonne and 10 lakh tonne to remain uncrushed. This is about the same as the last crushing season.

“During the 2007-08 crushing season, 171 sugar mills operated and so far, they have crushed about 702.1 lakh tonnes of cane, producing 84.1 lakh tonnes sugar, at 11.9% recovery. By the end of this year’s crushing season, which is expected to end by the first week of June, the state’s factories should be able to crush a total of 780 lakh tonnes of cane. However, this will still leave between 8-10 lakh tonnes of cane uncrushed,” Rajagopal Devara, the state’s sugar commissioner, said.

The Marathwada region has the largest amount of uncrushed sugar cane, which is a repeat of what happened in the preceding year, 2006-07. Along with Marathwada, other regions where large stocks of cane are unlikely to be crushed are Solapur, Ahmednagar, Nashik, Jalgaon, Dhule, etc.

In a move aimed at reducing the uncrushed cane, the sugar commissionerate has diverted 14.6 lakh tonne cane to those factories which had less cane in their own region so that their capacities were also utilised for longer periods.

Sugar mills have been informed that they will have to get clearances from the sugar commissionerate before stopping crushing operations. This is part of the state government’s move to ensure that the maximum amouont of cane is crushed before the monsoons end the crushing season.

During the last crushing season, mills crushed 730.9 lakh tonnes of cane to produce 84.3 lakh tonnes of sugar, with a recovery of 11.5%. This year, despite approximately 28 lakh tonne lower sugarcane being crushed, thanks to a .50% rise in recovery levels, sugar production is at comparable levels.

Sugar Mills To Get Free Play

NEW DELHI: The government may go in for total decontrol of sugar in one sweep. By scrapping all curbs in one go, instead of the earlier plan for phased decontrol, the Centre will let Indian sugar mills compete more efficiently from the next season onwards.

The liberalisation will mean mills will be able to sell sugar freely in the market. With no cane area reservation, mills will benefit from a direct link between the prices of cane and sugar. The matter is now under the consideration of Prime Minister Manmohan Singh.

Agriculture minister Sharad Pawar had earlier suggested a two-phase roadmap for decontrolling sugar. But the Prime Minister’s Economic Advisory Committee had rejected his proposal, calling it “distorting” in its present form. Instead, it had argued for decontrol at one go.

In his comments sent to the Prime Minister, the panel’s chairman, C Rangarajan, had stated: “The Pawar proposal takes up the easier part of the regulatory reform, involving the net fiscal outgo, in the first phase. While the more difficult aspect of doing away with the cane reservation system and the distribution criteria between factories have been proposed in the second phase, after the receipt of the report of the expert group on the sugar industry.”

“It is advisable that a decision on the regulatory reform of the sugar industry be taken at one go and implemented together,” Mr Rangarajan said in his report. As the expert group on the sugar industry will be submitting its report in the next few months, a view on the entire gamut of reforms will be taken simultaneously.

According to the proposal made by the ministry of agriculture, phase one would have focused on removing the 10% levy on mills, with the government switching to buying sugar from the open market for the fair-price shops.

This would have allowed mills to sell their entire produce freely in the market, by doing away with the monthly release-order mechanism. In turn, the government would have used customs tariffs to stabilise prices.

According to the proposal, the Central Sales Tax (CST) Act would also have been amended to include denatured alcohol on the list of goods of special importance, to make ethanol production and movement ‘hassle-free’ across the country.

In phase two, the ministry had proposed doing away with the cane reservation system and the distance criteria between mills. This would set up a framework for a uniform cane price, linked to sugar prices within the statutory minimum price system. It would have also done away with all the remaining curbs on the industry, including repealing/amending of the Sugarcane Control Order; the Sugar Control Order, 1966; the Levy Sugar Supply Control Order, 1979; and the Sugar Packing and Marking Order, 1970.

The current proposal to decontrol the sugar industry in one go may be well timed. The industry is banking on prices to climb in 2009, as low cane planting and lower sugar production globally will reduce the excess supply. Also, with crude oil prices hovering around $120/barrel, the ethanol industry in Brazil may consume more cane than the sugar factories.

Such a scenario would make it easier for Indian mills to compete more efficiently, without any likelihood of a steep fall in sugar prices. Farmers will be able to get better prices for cane once their fortunes are no longer tied to just one mill. Consumers, too, will get a better deal as supply will no longer be artificially controlled by the government.