The high production cost of sugar in Uttar Pradesh may adversely impact its export from the state, creating a glut-like-situation in the upcoming cane crushing season.
As against a projected sugar production of over 100 MT in the upcoming crushing season (2022-23), the state’s own consumption is likely to remain at 40 MT, leaving a vast chunk of sugar to remain stored in the mills if the state fails to push its stock in the national market, sources said.
The sugar mills are expected to start operation from next month.
The sugar production cost is primarily governed by the State Advisory Price (SAP), which is the highest in Uttar Pradesh.
The Yogi Adityanath government raised the SAP from Rs 315 to Rs 340 per quintal in September last year, ahead of the Assembly elections.
Official sources said that this raised the cost of sugar production from around Rs 31 to Rs 35 per kilogram.
The sugar industry has now demanded diversion of cane for the manufacture of ethanol.
A senior office-bearer in the Indian Sugar Mills Association (ISMA) said that the situation was relatively suitable last year when exports were comfortable.
This year the industry remains apprehensive even as the Centre is yet to announce its export policy.
The UP Sugar Mills Association (UPSMA) has already submitted its representation to cane minister Laxmi Narain Chaudhary and cane commissioner Sanjay Bhoosreddy, demanding their intervention in earnest.
Industry sources said that the timely announcement of sugar export policy resulted in export of 10 million tonnes of sugar from India.
“We are waiting for it. It is a decision which the Centre must take,” said an official in the cane development department.