Almost a month into the 2014-15 crushing season, sugar millers in Maharashtra are finding it tough as prices have comes under pressure in view of fresh supplies coming into the market.

Millers in the sugar heartland of south western Maharashtra are not ready to commit themselves on the quantum of the first instalment of cane payments to be made to the farmers.

Ex-factory prices, which were around ₹2,700 a quintal at the beginning of the season, have now dropped to around ₹2,500 and are expected to come under further pressure as crushing gains momentum in Karnataka and Uttar Pradesh, the other major producers.

According to the Indian Sugar Mills Association, sugar production in the 2014-15 season till end-November was higher by 56 per cent at 17.81 lakh tonnes over 11.4 lakh tonnes in the same period a year ago.

“Crushing has picked up, but mills in Kolhapur are finding it difficult to decide on the first instalment of cane payment to farmers,” said MG Joshi, Managing Director, National Federation of Sugar Co-operatives. “There’s no one to listen to the millers’ plight and some of them are seen resorting to distress sale,” Joshi said.

Price control The new government in Maharashtra has recently set up the Sugarcane Price Control Board, which is yet to take a decision on cane pricing for this season.

But some factories, mainly in the Solapur region, have reportedly decided to pay ₹1,500 as the first instalment to farmers.

“Prices are expected to come under further pressure and the Centre has to take some view on this issue that’s turning serious,” said Vinay Kore, Director, Warana Sugars. Kore suggested that the Government should create a buffer stock of about 40 lakh tonnes, the quantum needed for the public distribution system (PDS) by states for two years, a move that would take away the existing surplus and help stabilise prices.

“The situation is dicey as prices are coming down every day and the buying is need-based,” said Mukesh Kumar, Executive Director, Vishwanath Sugars and Steel Industries in Belgaum, Karnataka, where the state has asked the mills to pay the fair and remunerative price (FRP) of ₹220 per quintal for 9.5 per cent recovery, as announced by the Centre.

“To pay FRP, mills need some support of the Government,” Kumar said, adding that prices would come under further pressure over the next 10-15 days as production gains momentum in Karnataka.

Private mills have resumed their operations from November 30, following assurances by the State government that their demands for financial support would be looked into.

Ex-factory prices are coming down by ₹100-150 every month and the trend is expected to continue.

Exports unviable At these prices, millers may even find it difficult to pay FRP, said Abhijit Ghorpade, a Kolhapur-based exporter. With the global prices ruling at a five-year low, there export is not viable, Ghorpade said.

Also, millers are eagerly looking forward to the Government extending subsidy for raw sugar exports.

The Government has announced incentives for raw sugar production and exports up to September, but has not announced the incentive rate for October and November.

Some 297 mills had started crushing by end-November against 262 last year. A total of 509 mills undertook crushing in 2013-14 season that ended in September.

In UP, only 60 of the 124 have started crushing mainly from November-end. As a result, only 1.2 lakh tonnes have been produced by the mills in the second largest producing state. Similarly in Maharashtra, 148 mills had started operations and produced about 10.5 lakh tonnes, almost double the output over last year.

In Karnataka, 31 mills had started crushing and 3.36 lakh tonnes of sugar have been produced till end-November, almost similar to last year.

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