Sugar mills in Tamil Nadu are facing a double whammy as one more year of sugarcane deficit looms in 2018-19 (October-September) season. But in the backdrop of domestic sugar glut, the Centre’s relief measures — designed to tackle the oversupply — only add to the woes of the sugar companies.

Sugar mills in the State are working at 25-30 per cent capacity utilisation, against an installed capacity of about 30 lakh tonnes (lt) due to sustained dry spell in recent years. Last season, the total sugar output was about 7 lt.

Also, for the third year in a row, sugar recovery has dropped below 9 per cent, while top producers such as Uttar Pradesh and Maharashtra get around 11 per cent. So, on every tonne of sugarcane, mills in the State make much less sugar.

No transparency in quota

According to industry sources, there is no transparency in the monthly release mechanism. Despite repeated representations by the South Indian Sugar Mills Association – Tamil Nadu, the Centre has not clarified the formula on which the quota is set, they say.

The State’s monthly sugar consumption is about 1.25 lakh tonnes (lt), about 15 lt, annually. But since June, when the system was established, monthly releases ranged between 18,696 tonnes and 54,095 tonnes. This means sugar from other States is sold here and local mills are displaced from the market.

Similarly, the export quota has also proved adverse to Tamil Nadu. The export volume per mill is set based on the production of the last three years. In Tamil Nadu, sugar production has been dropping consistently. If the previous year’s production is high then they end up exporting more.

So in other States mills are expected to export about 14 per cent of production, Tamil Nadu mills will have to export about 21 per cent. Ideally, the mills should be exempted from exports or a fixed proportion of about 10 per cent should be set, according to SISMA representatives.

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