India's sugar production fell by 17 per cent to 115.4 lakh tonnes during the first four months of 2013-14 marketing year, that started October last year, because of delay in start of cane crushing operations.
Sugarcane price arrears to farmers have mounted to Rs 10,000 crore at the end of January from about Rs 3,000 crore at the start of the current marketing year as mills are facing liquidity problem in view of lower prices of sugar as compared with cost of production.
"Indian sugar industry has produced 115.4 lakh tonnes up to January 31, 2014. This is 16.6 per cent less than the sugar produced up to the end of January in the last season when the Indian industry had produced 138.5 lakh tonnes," Indian Sugar Mills Association (ISMA) said in a statement.
The industry body said that lower production is mainly due to late start of sugar mills across the country, including in two largest producing states of Maharashtra and Uttar Pradesh.
"Due to depressed sugar prices, which have fallen by almost Rs 6-8 per kg as compared to prices about 14-15 months back, the realisation for sugar mills is substantially lower as compared to the cost of production of sugar. The mills are, therefore, unable to pay the cane price of the farmers on time," ISMA said.
"A rough estimation would put all India cane price arrears at the end of January, 2014, at around Rs 10,000 crore," ISMA said, while fearing that cane price arrears might rise further as the season progresses.
Among states, Maharashtra has produced 40.75 lakh tonnes of sugar during October 2013-January 2014, which is about 8 lakh tonnes lower than 48.5 lakh tonnes produced in the corresponding period of previous year.
Sugar output in UP, the country's second largest producing state, stood at 27.6 lakh tonnes till January as compared with an output of 35.9 lakh tonnes in the year-ago period.
"Sugarcane yield across UP is reportedly lower by about 6-7 per cent as compared to last year, whereas the sugar recovery is almost similar at 8.86 per cent in comparison to that of last year," ISMA said.
India is the world's second largest producer of sugar and the biggest consumer. ISMA has projected 250 lakh tonnes of sugar in the full 2013-14 marketing year (October-September) against 251 lakh tonnes in the previous year. Annual domestic demand is seen at 230 lakh tonnes.
