AP’s Sugar Industry in Dire straits

Sugarcane

India is the second largest sugar producing country in the world. For the past 5 years the average sugar production in the country has been around 276 lakh tonnes while the average domestic sugar consumption has been around 251 lakh tonnes.

However there are certain issues that have been plunging this industry into losses making it unviable for many sugar mill owners to sustain.

Although Andhra Pradesh is not among the top sugar producing states in the country the problem faced by the industry here is glaring.

It is stated that out of a total of 30 sugar mills in the state only 9-10 are said to be in operation. ‘Out of this 4 are co-operatives and 5 are private factories’ informed Mr Victor Raju, MD Thandava cooperative sugars.

The problem is soo impeding that even large sugar mills are finding it hard to survive.

“Only 9-10 Sugar mills are in Operation in Andhra Pradesh.”

               — Mr Victor Raju,

                  MD Thandava co operative sugars

‘It is just becoming unviable both for mill owners and even for farmers’ opined Mr G Venkateswara Rao, Chief Operating Officer, KCP Sugar and Industries Corporation Ltd. and Vice chairman, CII Andhra Pradesh.

Rising material costs coupled with high transportation costs and severe shortage in labour are said to be some areas hurting the sugar industry in Andhra Pradesh.

“It is just becoming unviable both for mill owners and even for farmers.”

                               — Mr. G. Venkateswara Rao

                                 COO, KCP Sugar & Industries

‘It’s tough to find labour for harvesting here. In addition labour is more willing to harvest paddy than sugar as it is much easier compared to sugar cane’ informed Mr Nanda Kumar Ramanujalu, ISMA AP president and Chairman Natems Sugar speaking to Vizag Industrial Scan.

One of the issues that has been stifling the industry is the MSP.

With high production costs and low MSP sugar mill owners across the country have been facing the issue of surplus sugar and liquidity concerns.

This is because Sugar mills in the country are mandated to buy sugar ‘cane’ from farmers at FRP (fair and remunerative price) and have to sell at MSP which they say doesn’t even meet their production costs.

‘MSP on Sugar has not increased proportionately to cane prices. Sugarcane prices have been increased to satisfy cane growers’ stated Mr Nanda Kumar Ramanujalu.

As per statutory laws governing sugarcane in the country, every mill has to purchase every stick of cane from the farmer and payment has to be made within stipulated 14 days from the date of purchase of cane. ‘This is where cane price arrears start to accumulate and the liquidity crisis comes in due to high pay-out on account of cane purchase’ said an official source from the sugar industry.

“Even large companies are finding it difficult to sustain and operate in such market economics.”

                     —  Mr Nanda Kumar Ramanujalu, 

                           ISMA AP president

‘Even large companies are finding it difficult to sustain and operate in such market economics’ added Mr Nanda Kumar.

It is informed that the Government of India fixed the sugar MSP at Rs.29 a kilo in June 2018, which was revised upward to Rs.31 a kilo within 6 months, in February 2019.

‘The industry however has requested the Government to increase MSP on sugar to Rs. 34.50 a kilo for the current season i.e. 2020-21 SS’ said the source from the sugar industry.

One of things that the industry is in much need of is innovation and R&D. As Mr Venkateswara puts it ‘What we need is innovation in the Sugar Industry. We need the government to collaborate with premier institutions like IIT etc and spend on R&D in this sector and come out with new and innovative methods for harvesting. Mechanized harvesting is something that needs to some up be looked into’.

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