Cane-pricing dispute delays sugar production

Sugarcane crushing in Maharashtra, India’s biggest producer, will be delayed by at least a week this year after mills and farmers failed to agree on cane prices, a millers’ group said on Wednesday.

Crushing may begin from next week if an agreement on pricing is arrived this week, Ajit Chowgule, managing director of the Maharashtra State Co-operative Sugar Factories Federation Ltd., said in a phone interview from Mumbai. Farmers want cane prices to be increased by as much as 37.5 per cent to Rs 3,300 a tonne this year, he said.

Delay in sugar cane crushing in India, the world’s second-largest producer, may help stem a 23 per cent decline in prices in New York this year on outlook for a bigger global harvest and amid concerns that demand for commodities may decline due to the global economic slowdown. Sugar futures have declined every quarter in 2011, the longest losing streak in 13 years.

“Since the farmers’ costs have gone up, they are asking for extremely high prices, which the industry cannot pay,” Chowgule said. “Discussions are on between the state government and the farmers’ groups” to resolve the dispute, he said.

Sugar for March delivery fell 1.7 per cent to close at 24.85 cents a pound on ICE Futures US in New York yesterday. The October-delivery contract on the National Commodity & Derivatives Exchange Ltd. in Mumbai gained as much as 0.3 per cent to Rs 2,744 a quintal on Wednesday.

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Labourers in Maharashtra were seeking an increase in wages by 50 per cent to 100 per cent this year, delaying a start to the harvest season that typically begins on October 1, Chowgule said.

Farmers may employ more equipment this year to accelerate harvesting, he said.

Sugar output in Maharashtra may climb 2.8 per cent to 9.3 million tonnes in the season started October 1, compared with 9.05 million tonnes last year as farmers planted more area under the crop, Chowgule said.

“The crop is looking good and the monsoon seems to have withdrawn from most areas,” he said.

India, also the world’s top sugar user, may produce 26.5 million tonnes this year after higher cane prices boosted planting, compared with an estimated 24.3 million tonnes last year, Jayantilal B Patel, president of the National Federation of Cooperative Sugar Factories Ltd. said on September 27.

source: BS