INDIA: Mills slam media for rubbishing production expectations
Published: 08/17/2012, 5:27:10 PM
The sugar mills of Meerut and the adjoining areas of Modinagar, Balrampur and Malakpur have rubbished the recent local media reports which said that there would be a delay in the operation of the mills this season, according to the Economic Times of India.
Mill owners said this report was false and that every year, the mills become operational from the month of October and continue operating till the month of March without any delays.
"The report in the local media about the delayed start of the mill is a sheer canard. It will start operating from the month of October itself which is the schedule time for the mills to become operational," said Sunil Dutt, unit head of the Sukauti Sugar Mill. He added that the delayed operations of the sugar units of the region will give a bigger dent to their already severely-hit margins.
The unit heads of the mills said that farmers did not get paid on time because of the losses incurred by the mills. However, the mills are not going to shutdown or make any delays in the crushing of the cane.
Dutt also said that unlike farmers, who have the option of moving to other crops besides cane, the sugar mill owners have no choice but to stick to the production of sugar.
"The local cane department is also working as a facilitator between the farmers and the mills and is trying to eschew the situation of any stand-off between the two," said deputy cane commissioner, Meerut Cane Department.
The deputy cane commissioner also confirmed that the mills have tried to make the complete payments to the farmers.
"The sugar mills have suffered a lot during the last season of 2011/12 owing to higher prices paid for raw material, disparity between higher input price and selling price and less recovery rate (the amount of sugar drawn from a quintal of sugarcane)," said NS Birdie, unit head of Nanglamal Sugar Complex, a unit of Mawana Sugar. He added that in Naglamal Sugar Complex, the recovery rate was 8.61% only.
Birdie further said that sugar mills are not against paying the cane farmers as they are the oxygen for the mills. "The mills have tried their level best in terms of making the payments, but the high losses incurred by the mills have resulted in delay," he said. He added that the payments made to the farmers are always done in installments as and when sugar releases in the market. The release of sugar in the market is controlled by the government and the mills gradually collect the amount from the sale.
Talking to ET earlier, Shyam Lal Gupta, secretary of Indian Sugar Mills Association (Isma) said that the production cost of sugar ranges between INR3,200 (US$57.5) and INR3,400 per quintal. "The loss incurred by the mills can be understood from sugar sales realisation which is INR2,780 per quintal.
"The mills are required to sell 10% of levy sugar to the government, the price of which at present is set at INR1,890 per quintal. Rest 90% free-sale of sugar is sold in the market at a price of INR2,900 per quintal. Because of the lower-than-production-cost pricing, the mills are incurring a loss of nearly Rs 530 per quintal," said Gupta.
However, on concerns over drought impacting the crop in Maharashtra and Karnataka, the Sugar prices, on ex-factory basis in North India, have shot up by over 10% from about INR3,200 a quintal to around INR3,600 in the past fortnight. "The spike in the price has happened only recently and the mills have started realising higher revenue from the market. The prevailing high prices have helped millers cover production cost and reduce cane arrears or payments to farmers," say unit heads of the mills.
Isma has forecast an output of 25 million tonnes in 2012/13 season starting October, down from 26 million tonne projected by the industry body for the current year.