Sugar mills happy with higher prices

PUNE: By selling their sugar for Rs 28 a kg, sugar mills are making enough money to pay farmers the government-advised cane price ( SAP) and also some profit. Low wholesale prices at the start of the season, higher cane prices and the prospects of a bumper sugar supply have kept the companies on tenterhooks about the business prospects.

“The current ex-mill sugar price in Uttar Pradesh is Rs 28.50 per kg. We can pay the SAP of Rs 205 a quintal if sugar prices remain at Rs 29 to Rs 30 per kg,” said a senior official of the UP Sugar Mills Association. Sugar cane crushing is currently in full swing across the country, including top two producing states — UP and Maharashtra.

With sugar prices having firmed up despite increased sugar production, it is unlikely that the prices will come down significantly in the near future. This has helped the mills to pay more than the fair and remunerative price.

In Maharashtra, the mills in the high recovery zone of Kolhapur-Sangli have begun to pay the first advance of Rs 2,350 per tonne including harvesting and transport costs. In the rest of the state, most mills are comfortably paying the ex-field FRP of around Rs 1,500 per tonne although farmers are agitating for the first advance of Rs 2,000 per tonne ex-field.

“Cooperative banks in Maharashtra have given pre-season loans of Rs 2,075 per sugar bag (a quintal) based on a benchmark sugar price of Rs 2,500 per quintal. Of this loan, the mills get Rs 1,450 as cane price, Rs 250 as processing expense, while Rs 375 goes as recovery of past loans,” said Prakash Naiknavare, managing director of Maharashtra State Cooperative Sugar Mills Federation.

Though the Maharashtra sugar mills’ realisations are above the benchmark rate of the banks, the mills do not have access to the extra money. This has been earmarked by the banks for the recovery of past dues.

Sources in the South Indian Sugar Mills Association, Karnataka, said that mills had agreed to pay a cane price of Rs 2,200 per tonne in north Karnataka and Rs 1,800 per tonne in south Karnataka. With sugar prices currently ranging between Rs 27-30 per kg, the mills can comfortably meet farmers’ demands.