Not A Good Year For Sugar Industry

While the second half of the calendar year has not been good enough for the sugar industry on account of export ban and declining prices, the sugar industry may not see a better time next year as well. The prices will remain under pressure owing to bumper production (230 lakh tonne). The only hope is co-generation and ethanol. In 2006, the acreage of sugarcane in the country increased to 44.4 lakh hectare from 42.8 lakh hectare in 2005. More farmers turned to cane cultivation as a result of incentives, besides, a good cane price. The government is keen on taking the ethanol blending to 10 per cent by June 2007. If it is achieved, sugar mills will have an assured income. However, things are not very bright here. The 5 per cent blending is yet to take off nationally and has missed three deadlines. The profits and revenues of sugar companies over the next 3-4 quarters are expected to suffer. Balrampur Chini Mills and Dhampur Sugars recently announced declines in quarterly profits. Payments to farmers by the mills can also be delayed in the current season as a result of the softening sugar prices.