UP mills to procure 25% more sugarcane this season

Sugar sector has been the talk of the town for the past few days. The major sugar producing firms of the country have been topping the list of the gainers for quite some time now.

The sugar industry of India has risen marginally nearly 2 per cent to reach about 7.87 lac tonnes as compared to the production of last year, mainly on the back of early crushing in states such as Uttar Pradesh and Karnataka.

The Sweet Story Continues

In the background of the Uttar Pradesh government’s announcement of a hike of Rs 25 per quintal in cane price for the 2016-17 sugar crushing season, the value of sugarcane (the main raw material) procurement by mills is likely to exceed Rs 22,500 crores.

This would add up to 25 per cent more than the value of cane procured by the 117 sugar mills in the state in the 2015-16 crushing season.

According to the latest estimates, the sugar mills are likely to crush nearly 75 million tonnes (mt) and production will exceed 7.60 mt of the sweetener in the current season, against 6.85 mt of sugar output in season of 2015-16.

The state Cabinet meeting chaired by the UP Chief Minister Akhilesh Yadav on 18^th November increased the State Advised Price (SAP) of cane from Rs 280 per quintal for common variety to Rs 305.

Likewise, the price for early and unsuitable sugarcane varieties had risen to Rs 315 and Rs 300 for every quintal, respectively. Common variety account for the bulk of cane produced.

The sugar industry of the state has been demanding a revenue sharing model for the state to insulate the industry from seasonal fluctuations of demand and supply dynamics. At the moment, the wholesale sugar prices in UP are at the level of about Rs 3,300 per quintal.

Last year, the state had provided sops worth about Rs 11.70/quintal in tax subsidies to help mills overcome falling sugar prices.

The farmers of UP had been demanding SAP of Rs 350 per quintal due to rise in the input cost of the farms. Sugarcane is one of the major cash crops in UP and there are over 4 million rural households engaged in the farming of the same. UP and Maharashtra are top sugarcane and sugar producers of India and contribute about 50 per cent to India’s annual production. Of the 117 sugar mills in the Uttar Pradesh, 92 are in the private sector. The cooperative sector consists of 24 mills, while UP State Sugarcane Corporation Limited (UPPSCL) controls only one mill.

A Sneakpeek into the Companies Performance today so far

• The major sugar producers of the industry are mostly in the green zone.
• Dalmia Bharat share price is trading at Rs 122.00, up by 5.08 per cent.
• Dwarikesh Sugar share price is at Rs 269.15, up by 1.36 per cent.
• Dhampur Sugar share price is trading at Rs 112.45, up by 0.58 per cent.

It will be interesting to watch how far this green train travels.