The sugar season in India is off to a slow start as production of the commodity is down by a whopping 63.75 percent at 4.85 lakh tonnes against 13.38 lakh tonnes till November 15 this year versus last year.
This is largely on the back of a steep fall in the number of mills that are crushing sugarcane in the country. They have reduced to 100 from 310 last year. Maharashtra, one of the largest sugar producing states in the country, has not started crushing at all this year. Last year till November 15, about 149 mills had already started crushing the cane accounting for 6.31 lakh tonnes of sugar production.
Similarly the number of mills operational in Karnataka is also down at 18 against 53 last year. As a result, production of sugar in the state this year has fallen by more than 50 percent at 1.43 lac tonnes, as compared to 3.60 lac tonnes last year.
"The States of Maharashtra and Karnataka have faced drought last year, because of which the area planted under sugarcane therein has dropped by about 30% as compared to last season. With lower rainfall and water availability, the yields and recoveries would also be lower," Indian Sugar Mills Association (ISMA) said in a statement. "Plus the recent floods and extra rainfall have affected the crop further. The Government of Maharashtra has now decided to start the crushing of cane by the mills therein from 22nd November 2019."
The largest sugar producing state in the country, Uttar Pradesh, is an outlier so far with 69 operational sugar mills, the same as last year, producing 2.93 lac tons of sugar so far, a 66.5 percent increase.
About 2 mills each in Uttarakhand, Bihar, 1 in Haryana, 3 in Gujarat and 5 mills in Tamil Nadu have commenced crushing operations and together producing 49,000 tonnes of sugar till the first half of this month.
"As per trade and port information, about 2 lakh tonnes of sugar have already been shipped out for exports," ISMA said. "From market sources and information from sugar mills, it is learnt that contracts for another 12 lakh tonnes have been signed by the parties for exports."
Earlier this month, ISMA had forecasted that sugar production in the country was set to decline by 21.6 percent, the steepest fall in a year in over a decade, at 26 million tonnes. A record 33.16 million tonnes of sugar was produced in 2018-19. The early trends released today confirm the forecast.
The fall in production, however, is not a bad thing for the industry that has faced a glut situation in the domestic market for much of the last five years. The oversupply has kept sugar prices low impacting profitability of the industry which in turn has impaired their capacity to pay farmers. Sugar mills across the country owe around Rs 15,000 crore to sugarcane farmers.