Bitter days ahead for new sugar factories

According to the report, almost all of the two score new sugar factories which were licensed in the recent past will run into financial difficulties since there will not be enough sugarcane. The report details the quantum of sugarcane available for crushing, the existing cane crushing capacity in the State and the new capacity sought to be created. Most of the mills expected to face troubled waters are in Vidarbha and north Maharashtra. At least two factories in Dhule district, Sindhkheda Sahakari Sakhar Karkhana (SSK), with the dubious distinction of never having crushed cane, and the Panzarkan SSK, did not crush any can this season and were in a very bad shape, sources maintained.

Sugarcane production in Maharashtra touched an all time high of 460 lakh tonnes in 1995-96 which was a bad season despite the record production, when 515 lakh tons were crushed. The additional tonnage had come from neighbouring Karnataka, Gujarat and Madhya Pradesh.

The Sugar Commissioner’s report, however, has raised doubts about cane availability in the years to come in view of cyclic nature of the sugar industry. The report further questions the availability of cane, especially since the Maharashtra sugar industry will have an additional 50,000 TCD within the 18 months from now.

Eight factories which will become operational during 1997-98 are expected to augment the crushing capacity by 20,000 TCD. This, however, is slated to coincide with an expected reduction in area under sugarcane cultivation, leading to lower production. Thirteen more factories becoming operational in next 18 months will add another 32,000 TCD. The State will then require a whopping 80 lakh tons of additional cane.

It may be recalled that the State did not touch the 1995-96 high during the recently ended crushing season. Due to the cyclic nature of the industry, it is not likely to do so in the near future, either, sources said.

The cane production lowered by some 24 per cent in 1996-97 compared to the previous year while the production of sugar also has gone down by whopping 95.16 lakh quintals, according to a Vasantdada Sugar Institute report. Further, the area under sugarcane cultivation is expected to come down from the 1995-96 level of 5.4 lakh hectares. In Vidarbha, cotton has ousted cane while in western Maharashtra, the sugar bowl of the State, it has been soyabeans.

Recent amendments to zoning regulations will make the situation more acute, sources said. Non-member cane growers are now allowed to sell their produce to any of the factories. This provision, along with freeing the farmer from the obligation to sell cane in excess of his shareholding in the factory to the highest bidder will result in weaker factories going under, sources added.

The State Government’s rationale behind the amendments was to curtail the unmindful cane cultivation. he government would not be bound to pay the farmers compensation for cane not contracted to any of the factories.

The State has already distributed about Rs 38 crore for the uncrushed cane of 1995-96.

To add to the industry’s woes, 35 more licences have been issued which would further enlarge the crushing capacity by 150 lakh tons and would require 250 lakh aditional tons of cane. Of these, 21 are under construction, mainly in the Vidarbha and Marathwada regions with a few in western Maharashtra.