Sugar production boom leaves mill owners worried

| | Lucknow
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Sugar production boom leaves mill owners worried

Saturday, 30 May 2020 | PNS | Lucknow

The lockdown blues which cast a shadow on most economy sectors failed to stall the sugar industry in Uttar Pradesh. Till May 27, the state achieved a record production of nearly 1.25 crore metric tons of sugar against the previous highest of 1.20 crore MT in 2017-18 season. Last year, the industry had clocked a production figure of 1.17 crore MT.

The increase in UP’s sugar production is significant in the national context which witnessed a 19 per cent decline from 32.61 crore MT to 26.36 crore MT till May 15.

However, the positive development has failed to amuse private sugar mill owners as they worry about surging cane payment arrears, a crippling dive in demand due to the lockdown and hence bleak profits in the months ahead.

Principal Secretary (Sugarcane) Sanjay Bhoosreddy said on Friday that of the 119 sugar mills, 94 had closed down while 25 were still in operation. During the last season, on the same day, 109 out of 119 mills had stopped cane crushing.

“Farmers are our priority. So till the time cane crop is standing in fields, we have directed the mills to continue crushing. I expect the season to close in about a week’s time,” Bhoosreddy said.

Interestingly, the current crushing season in UP got prolonged as most gur and khandsari units had to stop cane crushing ahead of schedule due to lockdown. As a result, a large portion of cane going to them was diverted to sugar mills for crushing in the current season.

With crushing season being extended, sugar mills also piled up huge cane dues of over Rs 15,000 crore, especially as institutional sale of sugar was almost nil during lockdown.

“We have been literally caught between the devil and the deep sea. On one hand, we have huge cane arrears and on the other, all sources of revenue have dried up in the last two months. Sugar sales have been hit by the closure of malls, restaurants, cinema halls, etc.,” said an official of a sugar mill.

He added, “To top it, our ethanol sales too plunged as oil marketing companies are not lifting stocks and our power cogeneration  dues worth Rs 1,050 crore are also stuck with UP Power Corporation Limited.”’

“The problem with higher output is that we also end up posting higher arrears. While there is immense pressure on us to pay farmers, our liquidity needs to improve for us to do so,” the official said.

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