Pune : The sugar sector in India appears to be witnessing a positive turn with sugarcane yields surpassing expectations. However, a shifting landscape poses a fresh set of challenges for millers, including a cap on ethanol production and a decline in sugar prices, according to indianexpress.
With sugar production projected to comfortably exceed 300 lakh tonnes, mills are advocating for the production of ethanol from B-heavy molasses and sugar syrup. According to them, the absence of such a provision could lead to financial difficulties.
As of Wednesday, India has already produced 187.15 lakh tonnes, just 6.15 lakh tonnes shy of the 193.30 lakh tonnes produced on January 31, 2023. Maharashtra and Karnataka, initially considered potential trouble spots due to drought, have shown improvement, with millers attributing better yields to unseasonal rains.
Bhairavnath B Thombare, Chief Managing Director of Latur-headquartered Natural Sugar and Allied Industries, operating two sugar mills in Maharashtra, expressed confidence in the state’s sugar production reaching around 95 lakh tonnes. Thombare noted that none of the mills would close before March 31.
Despite mitigating fears of a sugar shortage, increased production has placed the industry in a challenging position. Last year, anticipating a shortage, the central government banned sugar exports and capped the diversion of sugar for ethanol production at 17 lakh tonnes. Oil marketing companies (OMCs) also favored ethanol produced from C molasses over B-heavy molasses and sugar syrup.
The surge in production has introduced a new concern for millers – cash flow. The current ex-mill price ranges between Rs 3,400-3,500 per quintal, a sharp decline of Rs 200 per quintal from the season’s initial prices.
Thombare highlighted that the cap on diversion is financially burdensome for mills, and the production of ethanol from B-heavy molasses and syrup adds to their financial constraints. As the President of the Western Indian Sugar Mills Association (WISMA), Thombare mentioned that millers are requesting the diversion of an additional 17-18 lakh tonnes of sugar for ethanol production.
He urged the government to permit 7 lakh tonnes of sugar syrup and 12 lakh tonnes of B-heavy molasses for the production of the fuel additive. While the government has incentivized ethanol production from C molasses, millers argue that returns on their investment come primarily from ethanol produced from syrup or B-heavy molasses.
