302 lakh tonnes of sugar production estimated during current sugar season

The country is expected to produce 302 lakh tonnes of sugar during the 2020-21 sugar season (SS), i.e., October 2020 to September 2021. Which is 30 lakh tonnes more than what was produced last season. However, Uttar Pradesh (UP), the top producer last year, is expected to produce only about 105 lakh tonnes in the current season, 21 lakh tonnes lesser than that produced last year. The estimated lower production this year is because of reportedly lower cane yields and lower sugar recoveries in the state. Estimates suggest that Maharashtra may become the top sugar producer in the current season. The difference between the production of the two states, however, will be nominal.

This information was shared in the second advance estimates released by the Indian Sugar Mills’ Association (ISMA) on 28 January. ISMA says the sugar production estimates have been arrived at after considering the reduction of sugar to the tune of 20 lakh tonnes due to the diversion of cane juice and B heavy molasses for the production of ethanol. In earlier estimates, ISMA had forecast sugar production figures of 320 lakh tonnes (in June 2020) and 310 lakh tonnes (in October 2020).

As is the practice, ISMA procured satellite images of the cane area in the second week of January 2021. The satellite pictures have given a good idea of the area already harvested and remaining unharvested area in the fields across the country. These images of harvested and balance area, the trend of yields and sugar recoveries achieved till now, as also expected yield/sugar recovery in the balance period of the sugar season, were discussed in the meeting of ISMA.

Mills in UP are expected to produce about 105 lakh tonnes in 2020-21 SS, as against 126.37 lakh tonnes produced in 2019-20 SS. The estimated lower production this year is because of reportedly lower cane yields and lower sugar recoveries in the State, much higher diversion to gur/khandsari units and much higher diversion of sugar for the production of ethanol by way of diversion of B-heavy molasses and sugarcane juice. It is estimated that about 6.74 lakh tonnes of sugar will be diverted for the production of ethanol by the sugar mills in the state in the current year as compared to about 3.70 lakh tonnes diverted in 2019-20 SS.

Maharashtra is expected to produce about 105.41 lakh tonnes in 2020-21 SS, marginally higher than Uttar Pradesh, as against 61.69 lakh tonnes produced in 2019-20 SS. The higher estimated sugar production this year is mainly due to increased cane area by about 48 per cent and better cane yields as compared to the last season owing to favourable weather conditions as well as an increase in the percentage of plant cane. It is estimated that sugar mills in the state will divert about 6.55 lakh tonnes of sugar for the production of ethanol in the current year, which is substantially higher as compared to only about 1.42 lakh tonnes diverted in 2019-20 SS.

The third major sugar-producing state, viz. Karnataka, is expected to produce about 42.5 lakh tonnes of sugar in 2020-21 SS, as against 34.94 lakh tonnes produced in 2019-20 SS. Sugar production had reduced in Maharashtra and Karnataka last season on account of drought in these states. There have not been any major changes in the other sugarcane-growing states of the country.

According to ISMA, considering an opening stock of about 107 lakh tonnes on 1 October 2020, domestic consumption of 260 lakh tonnes, sugar exports of 60 lakh tonnes and the estimated production of 302 lakh tonnes, the closing stocks as of 30 September 2021 is expected to be much lower at around 89 lakh tonnes.

The government has announced, says ISMA, two important policy decisions to improve the liquidity of sugar mills during 2020-21 SS — sugar export programme of 60 lakh tonnes and upward revision of ethanol prices — which have been welcomed by the industry.

However, the government is yet to announce the implementation of a very crucial policy decision, i.e., increasing the Minimum Support Price (MSP) of sugar. This will improve the liquidity of the mills, enabling them to make timely cane payments to farmers also. The current MSP is Rs. 31 per kg. Sources in the industry say that the committee of secretaries and group of ministers have agreed to increase this to Rs. 33. But the Cabinet is yet to give its seal of approval to the decision. A timely decision in this regard will enhance the ability of the mills to make payments to the cane farmers.