India sugar mills pack up on dwindling cane supply

(Reuters) -Indian sugar mills, which started crushing late this year, are closing operations two months ahead of season as cane supplies dwindle, hurting output already seen down, industry officials said on Thursday.

India's farm minister on Tuesday lowered sugar output to about 16.5 million tonnes, from an earlier estimate of about 18 million tonnes, much lower than last year's 26.3 million tonnes.

About half the sugar mills in the top producer Maharashtra have shut operations and remaining may end the season by March-end, Prakash Naiknavare, managing director of Maharashtra State Co-op Sugar Factories Federation Ltd, told Reuters.

In the current sugar year that started in October, 145 mills in the state began crushing, but 70 mills have stopped operations by Wednesday, he said.

In the previous crushing season mills had been operational till early June, when monsoon showers hit the state.

"By end of March all mills will be closed and final figure of crushing may be 405 lakh (40.5 million) tonnes and sugar production would be 50 lakh (5 million) tonnes," he said.

Naiknavre's new estimates slices off half a million tonnes from an earlier estimate.

Crushing was delayed in the state due to rains making transporting cane to factories difficult.

Most of mills Uttar Pradesh, the second biggest producer, have closed operations and crushing may stop by early March, S.L. Jain, director general, Indian Sugar Mills Association (ISMA) told Reuters.[ID:nBOM380516]

Crushing was delayed in Uttar Pradesh too, after millers went to court against a hike in minimum cane purchase price, trimming the overall crushing period for many mills.

"Almost 80 percent of mills in North Karnataka have stopped crushing. Very soon, all of the mills would stop crushing," M.R Desai, member of the Karnataka State Federation of Co-op Sugar Factories Ltd, said.

Together, the three states produced an estimated 19.3 million tonnes of sugar in 2007/08, more than 73 percent of the estimated domestic output of 26.3 million tonnes.