Sugar companies in Tamil Nadu, which face an acute sugarcane shortage in 2017-18 owing to extended dry spells in recent years, are pinning their hopes on a deal to bring in raw sugar from North India to keep operations viable in the coming season.
The standing sugarcane crop is estimated to provide for sugar production of less than six lakh tonnes in the October–September season. Consequently, mills’ capacity utilisation will drop below 20 per cent, and production will be less than half the demand of about 15 lakh tonnes annually.
A senior executive said that if sugar companies buy 50-60 lakh tonnes of sugarcane from farmers even at the statutory Fair and Remunerative Price, mills will lose about ₹1,000 on every tonne of sugarcane, with prices around ₹3,600 a quintal.
Senior executives in sugar companies said they hope to source raw sugar from Uttar Pradesh and Maharashtra, where there will be a surplus this season. This is a novel attempt as raw sugar has hitherto been imported only from international markets with government permission to tide over an overall shortage in the domestic market.
But the scheme to source raw sugar domestically “on a purely commercial basis will not fly”, said a company executive.
The Centre has to support mills in Tamil Nadu with production or freight subsidy. Adequate raw sugar is needed to take capacity utilisation of mills to about 50-60 per cent for the mills to be viable. The objective is help save the standing sugarcane crop and enable payments to farmers, they say.
Last year, the Centre allowed 5 lakh tonnes of raw sugar imports into the South and West when there was a regional imbalance. But this time Tamil Nadu alone faces a severe shortage.
Production estimateAccording to the Indian Sugar Mills Association’s estimate for 2017-18, domestic sugar production will be around 250 lakh tonnes, matching consumption, apart from 45 lakh tonnes of opening stock.
UP mills are likely to produce a record 100 lakh tonnes of sugar, Maharashtra’s production could nearly double to 75 lakh tonnes, and Karnataka is estimated to produce 26 lakh tonnes. Tamil Nadu should be allowed to bring in at least enough raw sugar to meet its local demand, said industry representatives.
According to industry sources, a delegation of sugar mill representatives from Tamil Nadu is meeting with their counterparts in Uttar Pradesh. The delegation is also likely to submit a representation to the Centre.