MUMBAI (Commoditiescontrol) - India sugar production as on December of current sugar season 2016-17 (Oct-Sept) rose a tad at 80.90 lakh tonnes against 80.56 lakh tonnes same period a year ago, The Indian Sugar Mills Association (ISMA) said in a release.
Around 462 sugar mills in the country were active in sugar production, down from 481 mills last year.
ISMA said that main sugar belt of Maharashtra viz. Kolhapur, Sangli and Satara, most of the sugar mills in these regions will continue their operations till end of March 2017, whereas mills in Pune and Ahmednagar are likely to operate till later part of February 2017.
Average sugar recovery achieved by the mills of Maharashtra so far is more or less same as that of last year till December, 2016. Early closures are mainly because of lower sugarcane production in some parts of Maharashtra, which has been accounted for while estimating sugar production from the State in the current year.
Ex-mill sugar prices which dropped by Rs. 2 to 3 per kilo since second week of November, 2016 have started improving and are now at the levels seen a couple of months back. These prices are just enough to cover the costs of production.
Sugar ending stocks in 2016-17 is likely to be 5-10 lakh tonnes more than what was earlier estimated due to lower off take and poor consumption. However, ISMA believe more analysis will be required to arrive at the figure of estimated consumption.
ISMA will carry out its second advance estimate for sugar production in 2016-17, in later part of January, 2017, which will be based on satellite images.
With higher cane price announced by State Governments like Uttar Pradesh, Punjab and Haryana, low sugar recovery being achieved in the States like Tamil Nadu, Andhra Pradesh etc. and lower capacity utilization in the drought affected States like Maharashtra, Karnataka, Telangana etc. the all India average cost of production of sugar during the current 2016-17 SS, will roughly be higher at around Rs. 35 to 36 per kilo (Rs. 2 per kilo higher than the previous year’s cost of production).
Sugar mills should be allowed to recover at least their costs during the current season, otherwise, they would not be in a position to make payments to farmers on time and would also not be in a position to repay the loans taken from Government of India including under SEFASU and soft loans, which are due to be repaid this year.
The first 3 months of the current season i.e. October-December 2016, has seen a big fall in sugar offtake. With weddings and family celebrations being at low key, and consumption of sugar sweetened products like biscuits, chocolates, beverages, ice creams etc. being lower due to lower availability of currency, there has been a demand destruction of almost 5 lakh tonnes of sugar. The offtake in October-December 2017, has therefore been significantly lower than last year.
Therefore, the sugar consumption in 2016-17 SS, earlier estimated to grow at 2% over last year, to 255 lakh tonnes, will be much lower. The offtake may thus be lower to even last year’s consumption of 248 lakh tonnes.
(By Commoditiescontrol Bureau; +91-22-40015533)