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Festive demand missing in sugar market, Maharashtra millers worry about higher molasses price

With 2019-2020 sugar season starting in the next few days, mills who wanted to increase their ethanol production also faced a economic block in the form of very high prices of molasses — the mother liquid left after sugar is extracted from it — which is the base for ethanol production.

Written by Parthasarathi Biswas | Pune | October 27, 2019 10:25:37 am
Beas pollution: No criminal complaint against Chadha Sugars yet, Rs 5 crore fine pending Currently, molasses prices are around Rs 10,000 per tonne which millers say will make the production of ethanol non-viable. (Express photo By Pavan Khengre)

The festive season has failed to cheer up the sugar sector with sales remaining mostly subdued. Mukesh Kuvadiya, honorary secretary of Bombay Sugar Traders Association, said changing preference and lifestyle has actually seen festive demand for sugar dipping by around 20-30 per cent in the last five years or so.

“Instead of sweets, people now prefer clothes, dry fruits or gadgets as gifts during the festive season. Thus, in the last five years we have seen a gradual slide in festive demand in sugar,” he said. As sales remained down, sugar prices also failed to gain much traction.

Mill prices of sugar thus hovered around Rs 3,100-3,200 per quintal in most parts of Maharashtra. With 2019-2020 sugar season starting in the next few days, mills who wanted to increase their ethanol production also faced a economic block in the form of very high prices of molasses — the mother liquid left after sugar is extracted from it — which is the base for ethanol production. Currently, molasses prices are around Rs 10,000 per tonne which millers say will make the production of ethanol non-viable.

Earlier this year, the Central government had fixed the price of ethanol to around Rs 60 per litre and also allowed for production of ethanol directly from sugarcane juice, sugar and molasses. Bhairavnath B Thombare, president of the West India Sugar Mills Association, the umbrella body of private millers in Maharashtra, pointed out that the present prices are mostly due to constrained availability. “Once the cane crushing starts, the prices are to come down, but given the shortage of cane, ethanol production might still be non-viable at the present sale prices,” he said. As against the 40 lakh tonnes of molasses the state produces, it is expected that the production would be around 22 lakh tonnes.

Recently, when oil companies had floated tenders for procurement of 510 crore litres of ethanol for their blending programme, tenders for only 110 crore litres were filed. Most mills would prefer to produce sugar both white and raw rather than diverting their juices for ethanol. The Centre’s push for ethanol is to fulfil its blending target of 10 per cent to reduce the import bills and to help sugar sector escape the perennial problem of over production. The present sugar season is to start with an opening stock of 145 lakh tonnes of sugar which has reduced the chances of price rise in sugar.

Referring to export contracts for 30,000 tonnes of sugar, signed with Iran by millers in Maharashtra,  Kuvadia said, “This contract is for the sugar produced in 2018-19,” he said. The Indian government has set a target of 60 lakh tonnes for exports, but Kuvadia said around 50 lakh tonnes would be exported in the upcoming season. “The figure will become clear once Brazil starts its operations,” he said.

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