New Delhi: India's sugar production rose by 16 percent to 27.84 million tonnes (MT) till May 15 of the current marketing year that started in October last year, resulting in sweetener's low prices and huge cane arrears to farmers at over Rs 21,000 crore.
Indian Sugar Mills Association (ISMA) demanded that the Centre should either clear cane arrears to farmers directly or purchase 3 MT of sugar from the millers at the earliest to help them in making outstanding cane payments.
"As on 15th May, 2015, sugar mills have produced 27.84 MT of sugar for the current 2014-15 sugar season, 3.84 MT more than the sugar produced by the mills during the corresponding period in 2013-14," ISMA said in a statement. Sugar year runs from October to September.
State-wise, sugar production in Maharashtra rose to 10.43 MT till May 15 as against 7.72 MT in the year-ago period.
Uttar Pradesh-based sugar mills produced 7.08 MT till May 15 against 6.5 MT in corresponding period of 2013-14.
Output in Karnataka went up to 4.87 MT from 4.11 MT.
Sugar production of India, the world's second largest producer, is estimated to touch 28 MT in 2014-15 marketing year as against 24.3 MT in the previous year.
Annual demand is pegged at 24.5 MT, while exports are projected at 0.7 MT.
ISMA said the closing stock of sugar at the end of the current marketing year is estimated at around 10.3 MT, the highest in the last six sugar seasons.
"Sugar prices in the domestic market are highly depressed and are ruling at Rs 2,600 per quintal in Northern parts of the country and at Rs 2,300 per quintal in Southern and Western parts of the country," the statement said.
ISMA said that the cane price arrears have crossed Rs 21,000 crore, which is almost 35 percent of the total cane price payable in the season.
"This is the worst ever situation in the history of the Indian sugar sector," it said.
Besides higher cane production, the association said that the reason for surplus sugar output is that mills are under legal compulsion to crush all the sugarcane.
"Therefore, either the Government pays the cane price arrears to the farmers directly or assists the industry by buying out 3 MT of sugar at the FRP based cost of production as well as ensuring that the ex-mill sugar price at least covers the costs of producing sugar," ISMA demanded.
The association said that the time is running out and therefore, the government needs to intervene quickly.
The Centre had recently announced hike in sugar import duty to 40 percent from 25 percent. Earlier this year, it had announced Rs 4,000 per tonne as subsidy for exports of 1.4 MT of raw sugar.
With depressed global prices, mills have exported only 4.6 lakh tonnes of sugar till first week of May, 2015.
