Sugar mills face molasses glut
Sugar mills in Uttar Pradesh, which are facing cane arrears owing to falling prices and a market glut, are also saddled with huge quantities of molasses, a sugar byproduct. The situation in other sugar-producing states is no different and they are feeling the pinch of a market glut and subdued takeoff.
In this season, record sugar production in UP, close to 12 million tonnes (MT), has resulted in record molasses output of over 4.88 MT, far exceeding the market demand. However, Tamil Nadu and Telangana are facing shortages of molasses and there are buyers in Odisha too, an industry source said.
With the crushing season on, molasses production will add to the unsold inventory while the prices have hit rock bottom. They were about ~800 a tonne in October-November last year but now mills are getting nothing from it.
Molasses is processed to produce ethyl alcohol, used for manufacturing industrial chemicals, and methyl alcohol, an input in making liquor.
Currently, UP sugar mills have unsold molasses of more than 2.62 MT, including about 0.43 MT of reserved stocks, which have not been lifted by liquor manufacturers. The mills want the UP government to allow free and open sale of molasses. At present, the state mills have run up dues of over ~120 billion.
While the UP Sugar Mills Association (UPSMA) has been petitioning the state to tweak the molasses sale policy, another representation has been made to the principal secretary (excise department), apprising her of the “crisis situation”.
Although the UP government allows selling molasses to other states, every consignment needs written permission from the state excise commissioner, while the department cross-checks with the buyer, thus rendering the process time-consuming.
“Unsold molasses degrades over time in quality and realisation value. Besides, it also poses pollution risks because mills have run out of space, and therefore it is being stored in kachcha pits dug in the ground,” a senior UPSMA official told Business Standard.
Mills have urged the government to allow shifting stocks that have not been lifted to the unreserved category, and free exports to other states. Besides, since molasses output has breached the target of 4.55 MT set for the current season, the mills have demanded that the mandatory fixed quota for distilleries at 12 per cent be abolished, since there was excess stock available.
At the same time, permission is required for transferring molasses for ethanol, and such applications in large numbers by mills are pending with the state excise department, which need to be processed urgently, the UPSMA has underlined.