Agriculture Industry

Lower sugar production crushes hopes of Maharashtra mills

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10 February 2023, Maharashtra: What was predicted to be a bumper season for sugar mills in Maharashtra is bound to fall short of its expectations. The season will be shorter and sugar production is likely to fall below the initial estimates due to less per-hectare yields and increased crushing capacity in Maharashtra, the leading sugar producer in the country.

On the other hand, the mills have been fairly regular with their payment to sugarcane farmers. The mills have so far cleared 88 per cent of the total Rs 15,166.08 crore they owe to farmers.

After a bumper production in 2021-22, this season was also supposed to go further up and record a historic high in production. Over 200 mills were expected to crush 1,343,343 lakh tonnes of cane and produce 138 lakh tonnes of sugar. However, all calculations seem to have gone wrong and now millers say the state would see a production of around 122-125 lakh tonnes of sugar, lower than that of the previous year.

Prolonged monsoon has led to a significant dip in per-hectare yield. The rainy season which was supposed to continue till May stretched up to September-October. Lower cane availability and increased crushing capacity are the two main reasons that affected production.

Despite the unfavourable situations, mills have however managed to keep their payment on a fairly good track. Till February 6, the sugar commissioner’s office has received payment details from the 202 mills in operation. As of February 6, mills had crushed 635 lakh tonnes of cane and for this, they had to pay their farmers Rs 15,166.09 crore as the government declared Fair and Remunerative Price (FRP).

Of this, Rs 13,276 crore has been paid, resulting in arrears to the tune of Rs 2,297 crore.

Of the 202 mills that are operational, 76 have cleared all their payments and 126 mills have reported arrears. Apart from the dip in sugar production this season, the cash flow of the mills has been hit due to the decision of the central government to not provide an extra quota for export. The majority of the physical exports were done by the mills in Maharashtra. The ex-mill price (the price fixed by mills at the mill gate) has stagnated between Rs 3,100 and Rs 3,200 for one quintal.

“If mills were allowed to export an additional 20 lakh tonnes, the payment situation would have been much better,” said a miller from Marathwada.

As summer proceeds, most farmers especially in Solapur and Marathwada have expressed concern about the fate of their standing crops. Efforts are being made to ensure easy availability of water till the season lasts and farmers do not face the problem of their crops drying up.

Also Read: GST rates on agrochemicals must be maintained at 18% to avoid inverted duty structure: CCFI

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