Eighteen Days of Standing Cane: Crush, Transfer or Leave in the Field
A cooperative mill with a crushing capacity of 7,500 tonnes per day is 140 days into its season and has 18 days of cane still standing in its reserved area - about 13.5 lakh quintals. Recovery on cane crushed so far is 10.2%, but the cane now standing has been through two late irrigations and a cold spell, and the chief chemist expects only 8.4% from it. Sugar sells at ₹3,700 per quintal; molasses yield is 4.5% of cane and realises ₹1,000 per quintal; conversion cost, including fixed overhead absorbed at current throughput, works out to ₹38 per quintal of cane; and cane is paid at ₹370 per quintal. The cane department refuses to leave 1.35 lakh tonnes unharvested. A neighbouring mill 40 km away, still recovering 10%, has offered to take the entire quantity if the mill bears transport and handling of ₹6 per quintal; the farmer would still be paid ₹370.
1. Calculate the contribution per quintal of cane at 10.2% and 8.4% recovery, and find the break-even recovery.
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Revenue per quintal of cane at 10.2%:
- Sugar: 0.102 × ₹3,700 = ₹377.40
- Molasses: 0.045 × ₹1,000 = ₹45.00
- Total = ₹422.40
- Less cane ₹370 and conversion ₹38 = +₹14.40 per quintal
At 8.4%:
- Sugar: 0.084 × ₹3,700 = ₹310.80
- Molasses: ₹45.00
- Total = ₹355.80 − ₹408 = −₹52.20 per quintal
Break-even recovery: r × 3,700 + 45 = 370 + 38 = 408, so r = 363/3,700 = 9.81%.
The standing cane at 8.4% is 1.41 percentage points below break-even. On 13.5 lakh quintals, crushing it in-house loses 13.5 lakh × ₹52.20 ≈ ₹7.05 crore.
Note the leverage: every 1 percentage point of recovery is worth ₹37 per quintal, so late-crushed cane destroys value faster than any saving the mill can make on conversion. This is why the chemist's figure matters more than the volume.
2. Compare the three options - crush in-house, transfer to the neighbouring mill, or leave the cane unharvested - and recommend one with numbers.
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Option A - crush in-house. Contribution −₹52.20 per quintal, total loss ≈ ₹7.05 crore, plus poor sugar quality and boiler load from immature, watery cane.
Option B - transfer to the neighbour. The mill pays cane at ₹370 plus ₹6 transport and handling = ₹376 per quintal for no sugar of its own, i.e. a net cost of ₹6 per quintal, total 13.5 lakh × ₹6 = ₹81 lakh. The farmer is paid in full and the neighbour earns the sugar.
Option C - leave it standing. No direct cash outgo, but the farmer loses his crop, the losses fall on the weakest party, the mill's supply relations and its indent credibility are damaged, and the cane will drift to unlicensed gur units anyway, creating a legal problem.
Recommendation: Option B. It costs ₹81 lakh against a ₹7.05 crore in-house loss - a saving of about ₹6.24 crore. Two refinements: negotiate the ₹6 down or share it with the neighbour, who is gaining 10% recovery cane at zero procurement effort; and obtain the Cane Commissioner's permission in writing, because cane from a reserved area cannot simply move to another mill. Sign a tripartite record with the neighbour and the society so that no farmer's payment is disputed later.
3. What two changes in the mill's own planning would prevent this situation from recurring, and how would each be verified on the ground?
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1. A maturity-based variety and planting calendar. The root cause is that 13.5 lakh quintals were still standing at day 140. That happens when late-planted and late-ratoon cane is admitted into the reserved area without matching the mill's crushing calendar. The society should map each village's cane by variety and expected maturity, fix planting windows (early, mid and late), and schedule indents so that early-maturing cane is cut in the first half of the season. Verification: a variety-wise maturity register at the society, cross-checked against the indent list and the gate entries each fortnight.
2. A supply discipline and accountability rule. Publish a cut-off date for each village with a graded late-supply penalty and an early-supply incentive, and stop accepting fresh ratoon registration after the cut-off. Verification: the notice board list, the slip book, and a fortnightly review with the District Cane Officer.
The supervisor's own check is simple: count the days of cane standing against the calendar in December, not in March.