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Sugar production in India on upward swing; mills in Maharashtra directed to produce oxygen

50 to 60 factories express interest in O2 production

man-carrying-sack-sugar-reuters FILE PHOTO: A worker carries a sack of sugar on his shoulders at a depot in Peshawar, Pakistan January 23, 2019. REUTERS/Fayaz Aziz/File Photo

Sugar production in India has increased with sugar mills across the country producing 299.15 lakh tonnes of sugar between October 1 2020 and April 30, 2021—an increase of about 41 lakh tonnes from the 258.09 lakh tonnes produced at the same time last year. 

However, as compared to 112 sugar mills that were crushing sugarcane on April 30, 2020, only 106 sugar mills were crushing sugarcane on April 30 this year. The second wave of COVID-19 in India has not hampered any of the sugar factory operations as the sugar industry falls under the ‘essential goods’ category. Logistics issues that were faced during the first wave are not being faced in the second wave due to better preparedness from the industry. 

Almost all the states witnessed an increase in sugar production with Maharashtra, producing 105.63 lakh tonnes of sugar till April 30 2021 compared to 60.95 lakh tonnes produced last year during the same period with almost 44.68 lakh tonnes higher than last year. In another high, the sugar-producing state of Uttar Pradesh recorded production of 105.62 lakh tonnes of sugar as of April 30 2021, which was 10.90 lakh tonnes lower than the production of 116.52 lakh tonnes achieved by the state last year on the corresponding date. 

Karnataka, another high sugar-producing state, had produced 41.67 lakh tonnes in April 2021. Gujarat on the other hand produced 10.15 lakh tonnes of sugar till April 30 2021. In Tamil Nadu, 6.04 lakh tonnes of sugar was produced when compared to 5.45 lakh tonnes produced on the corresponding date last year. The remaining states of Andhra Pradesh, Telangana, Bihar, Uttarakhand, Punjab, Haryana, Madhya Pradesh, Chhattisgarh, Rajasthan and Odisha had collectively produced 30.04 lakh tonnes of sugar till April 30 2021. 

In order to support the export program for sugar, the government had allowed the swap between MAEQ Maximum Admissible Export Quota (MAEQ) and domestic sales quota for the current 2020-21 Sugar Season (SS), which received a positive response from the sugar mill owners.. So far, about 10.5 lakh tonnes of reallocations have already been done by the government. Additionally, DFPD (Department Of Food And Public Distribution) (DFPD) has also reallocated about one lakh tonnes of sugar as per mill wise export performance and contracts signed by mills up to the end of March, 2021. 

As per market reports, about 54-55 lakh tonnes of contracts for the export of sugar have already been entered so far. This is more than 90 per cent of the total MAEQ quantity for 2020-21 Sugar Season (SS). Out of this, about 25.24 lakh tonnes of sugar has been physically exported out of the country during Jan 2021 and Mar. 2021 under the MAEQ export program for 2020-21 SS which was announced on December 31, 2020. Around 10 lakh tonnes of sugar is estimated to have been shipped out in April 2021, taking the total exported quantity to over 35 lakh tonnes till the end of April, 2021. As per market reports, another 8-10 lakh tonnes of sugar is expected to be physically exported in May 2021.  

Experts from CRISIL told THE WEEK that sugarcane yields have increased by 2-4 per cent in the last five years in the key cane growing states of the country and sugar mills are earning higher revenues than before. 

“Higher amount of sugarcane is being diverted towards the production of B heavy molasses (used in the production of ethanol). This has led sugar mills to earn higher revenues from the distillery segment in the past 2-3 years. In SS 2020 (October 2019- September 2020), the industry is estimated to have diverted 15 per cent of sugarcane towards the production of B heavy molasses as against less than 10 per cent in SS 2019. Since sugar prices are controlled by the government, the industry has not seen any significant fluctuation in sugar prices. 

Sugar price for the sugar season 2019 and 2020 stood at the minimum mark of Rs. 31 per kg. During the sugar season this year (2021) too, sugar prices are expected to remain relatively stable,” Hetal Gandhi, Director, CRISIL Research told THE WEEK. 

This expert further adds that in states such as Maharashtra, sugar mills have been directed to produce medical grade oxygen to help with the ongoing oxygen crisis in India. About 50-60 factories have expressed interest. However, till now none of them have begun the production of oxygen in the state. 

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