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Maharashtra sugar mills to cut prices as it faces UP heat

PUNE: Uttar Pradesh’s sugar mills have dislodged their Maharashtra counterparts as the largest suppliers of the sweetener in Gujarat and the north-eastern region, forcing the latter to cut prices to stem further loss of market share, according to industry players.

Until 2014-15, Maharashtra was the top sugar-producing state which sold its surplus in Gujarat and the northeastern states. Last year, Uttar Pradesh took the No. 1 spot after cane farmers there adopted a new variety which has a higher yield, and the state had enough surplus to sell beyond its surrounding states, including in Maharashtra’s traditional markets.

“Earlier, Maharashtra and Uttar Pradesh had about 75% and 25% share, respectively, in markets like Gujarat and the North East. Since last year, the situation has become exactly the opposite, with UP now serving 75% of these markets,” said Abhijit Ghorpade, a Kolhapur-based sugar broker.

As a result, Maharashtra’s sugar sales have slowed down considerably and mills have been forced to slash rates to as low as Rs 31.50/kg ex-mill to stay competitive. The loss of market share has the state’s sugar industry worried as sugar production is expected to increase next year.

Uttar Pradesh, which produced a record 90 lakh tonnes of sugar in 2016-17, is expected to top 100 lakh tonnes in the 2017-18 sugar season.

Last year, Uttar Pradesh’s mills extended their markets as far as Nagpur in Maharashtra, raising alarm bells for the state’s sugar industry.

“With increase in sugar production, UP mills were under pressure to liquidate their stocks. While sugar mills in Maharashtra had refrained from selling even when prices were Rs 36/kg ex-mill, hoping for a further increase in prices,” said Ghorpade.

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