The delay in payment by sugar factories has not deterred farmers in Uttar Pradesh from planting more cane for the new 2012-13 season.

Lured by a high State-advised price for sugarcane last year, farmers in Uttar Pradesh have planted cane in an additional area of 90,000 hectares till May 2, or 4 per cent higher than the corresponding previous year. The total area under sugarcane in Uttar Pradesh has, so far, increased to 23.60 lakh ha as against 22.70 lakh ha last year, according to latest Government data.

This is even as cane arrears or payment to be made by factories to farmers in Uttar Pradesh exceeds Rs 4,500 crore for the 2011-12 sugar season that comes to an end in September. It is estimated that cumulative cane arrear build up across the country stands at over Rs 10,000 crore. Uttar Pradesh is the largest grower accounting for close to half the country's area under sugarcane. The State is the second largest producer of sugar after Maharashtra.

Besides Uttar Pradesh, states such as Tamil Nadu, Andhra Pradesh and Bihar have also reported higher area under sugar cane, according to the latest Government data. The overall area under cane across the country has gone up by one per cent to 48.61 lakh hectares as against 47.61 lakh hectares.

Tamil Nadu has reported a 21 per cent rise in area at 3.73 lakh hectares, while in Bihar the increase is about 8.5 per cent. However, states such as Maharashtra and Karnataka have reported a marginal dip in area so far. Karnataka has registered a 11.6 per cent decline at 3.80 lakh ha, while in Maharashtra the decline is less than a per cent.

Surplus output

The increasing area under sugarcane has raised the prospects of a surplus sugar output in 2012-13, for the fourth consecutive year in a row. For the past three consecutive years, the country has registered a surplus in sugar output and in the current 2011-12 season, production is set to touch a record 26 million tonnes, while domestic consumption is pegged at 22 mt.

Based on the current sowing pattern, the International Sugar Organisation (ISO) has pegged India's 2012-13 output at 24.5 mt, down 5 per cent over the previous year.

ISO believes that the cyclical nature of sugar industry and build up of cane arrears would hurt the output marginally.

However, the National Federation of Co-Operative Sugar Factories estimates the 2012-13 output at 25 mt. The Indian Sugar Mills Association is yet to come up with its projections for 2012-13.

The Government recently freed up sugar exports by lifting the quantitative restrictions, a move that industry believes will help liquidate rising stocks and reduce cane arrears.

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