Meet to discuss low sugar output

Following fears of a sharp drop in production of sugar in Maharashtra in 2008-09 (October-September) and the expected extension of the crushing season, chief minister Vilasrao Deshmukh has convened a meeting to discuss the impact of low output on the industry, on Tuesday. Maharashtra is India’s second biggest sugar producer after Uttar Pradesh.

The state commissioner of sugar and the Federation of Cooperative Sugar Factories in Maharashtra have already projected an over-30% cut in sugar production, at 57 lakh tonne in 2008-09, compared to 90.95 lakh tonne in 2007-08. Besides, the availability of cane will also be lower at 525 lakh tonne against 761 lakh tonne.

The meeting will also decide on the postponement of the crushing season from October 1 to November 1 to avoid low sugar recovery. The government will also decide a policy on pre-seasonal loans for the sugar industry. According to the industry estimates, over 50 mills will need a pre-seasonal loan of Rs 125 crore.

A state government functionary told FE, “Due to low availability of cane, there will be a decreased involvement of sugar cooperatives in the coming season. Nearly 135 sugar cooperatives, against last year’s 145 mills, are expected to participate to produce 57 lakh tonne. The production is expected to be further low, at 46 lakh tonnes, in 2009-10.”

Sources said that the meeting would also decide on the payment of advances to sugar mills and whether it will be equivalent to the statutory minimum price (SMP). Prakash Naiknavare, managing director of the federation said, “The meeting will take stock of the crushing season of 2007-08, the final crane price of that season, the date of crushing season for 2008-09, first advances, pre-seasonal loans, sugar export subsidies and valuation of sugar stocks.”

He admitted that though the production of sugar would be low, the realisation would be quite good, mainly due to the surge in sugar prices. “For the first time in the last two years, sugar prices have soared to Rs 1,675 per quintal, against the cost of production of Rs 1,475 per quintal.

source:financialexpress