Sugar mills in the state, which are already grappling with low demand and the pressure to pay minimum Fair and Remunerative Price (FRP) to cane growers, are being forced to sell superior-quality sugar at lower prices.
The National Sugar Institute in Kanpur grades sugar from a category of SS 31 to L 31, based on the size of the grain. L 31 has the largest grain size while SS 31 has the lowest. Grain size is developed during the process of crystallisation, when thick syrup obtained from evaporating the cane juice is boiled at low temperature under partial vacuum. Introduction of ‘seed’, in the form of powdered sugar or slurry, helps in the formation of sugar grains.
Grain sizes automatically increase if the syrup is allowed to remain in the ‘crystallizer’ for a longer time. In Maharashtra, most of the sugar produced is of S 30 grade. Only a few mills actually produce L grade sugar during the crushing season as the process slows down the overall disposal of harvested cane.
As the cost of production for both L and M grade sugar is higher, they are sold at a higher price. Usually, ex-mill price of M grade sugar is Rs 100 more than normally produced S-grade sugar.
But since the last few weeks, mills have been floating tenders for both M and S grade sugar at the opening price of Rs 3,100 per quintal. This is the first time mills in the state are being forced to do so and the move reflects the deep crisis in the sector, said a private miller from Kolhapur. “Normally, M grade sugar should be priced at Rs 3,200 per quintal, but we are forced to slash the price given the urgency of the situation,” he said.
The move comes a month after the Centre increased the minimum selling price (MSP) of sugar to Rs 3,100 per quintal. Even the higher MSP has failed to result in any windfall gains for millers as overall demand has remained low. Most of the sales are being cornered by traders who had stocked up on sugar when the MSP was Rs 2,900. “Now, they are selling their stocked sugar below the current MSP and registering a profit. Mill gate sale has slowed down considerably,” said the miller.
To add to the sector’s woes, the sales quota for March has been fixed at 24.5 lakh tonne which, say industry insiders, is too high.