State of the Economy 2019

The Age of Surplus

High remunerative prices and record production have left UP’s sugar-belt stranded in an unprecedented crisis

Photographs by Vishal Koul

On a mild chilly afternoon, Tarachand Sharma, a farmer in his late 60s, is sitting on a makeshift bed attached to the trailer of his tractor parked outside Simbhaoli Sugar Mill’s Brijnathpur unit. He has been waiting there for more than 36 hours, hoping that the mill would buy his sugarcane. He is not alone. Trucks and vehicles laden with sugarcane can be seen as far as the eye can see. “I haven’t received any receipt from the Society Commission for my sugarcane, but I came here to sell it because I don’t have the storage capacity to keep it,” says Tarachand. 

While he waits with other farmers outside the mill for offloading their new produce, Tarachand complains that sugarcane growers still haven’t received payment for the previous sugar season. Anuj Tatsingh, who grows sugarcane on his 16-acre land, says it’s not only Simbhaoli Sugars, but several other mills located in various parts of western Uttar Pradesh (UP) haven’t paid farmers their due. “I have eight brothers who grow sugarcane in various parts of the state. All of them including me are waiting for payment,” complains Tatsingh. He adds that he isn’t hopeful of getting his dues anytime soon.

His pessimism isn’t unfounded. Several mills like Simbhaoli are in the red due to low sugar prices. With sugarcane production hitting a record high of 32 million tonne (MT) in sugar season (SS) 2017-18 (October-September), the sugar price hit a 28-month low of Rs.25.50 in April last year. As the cost of production at Rs.36/kg outstripped the selling price, sugar mills have been trapped in a cycle of debt and surplus.

Low Hope

The sugar sector is facing a crisis from abundance, and any relief isn’t in sight at least in the near term. After producing 32 MT in SS 2017-18, the industry is expected to add another 31.5 MT to the existing stock in SS 2018-19. Adding to the sector’s burgeoning woes, domestic demand still stands at 26 MT, which is still below expected production.

“The season has started on a ne


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