India's sugar production increased by 15 per cent to 16.7 million tonnes till February 15 of this marketing year that started October, while cane price arrears to farmers have touched Rs 12,300 crore.
Sugar output of India, the world's second largest producer after Brazil, was 14.52 million tonnes in the year-ago period, according to Indian Sugar Mills Association (ISMA).
ISMA had last month projected production at 26 million tonnes in the 2014-15 marketing year (October-September) as against 24.3 million tonnes in the previous year. The annual domestic is seen at 24.8 million tonnes.
"Out of the estimated 260 lakh tonnes of sugar in 2014-15, 518 sugar mills have produced 167.08 lakh tonnes of sugar till 15th February, 2015," ISMA said in a statement.
Sugar production in Uttar Pradesh increased to 4.22 million tonnes till February 15 of this marketing year against 3.57 million tonnes in the year-ago period.
In Maharashtra, sugar output stood at 6.5 million tonnes as compared to 4.98 million tonnes, while Karnataka produced 2.82 million tonnes against 2.72 million tonnes during the period under review.
"As on 15th February, 2015, cane price arrears for the current 2014-15 season across the country stood at Rs 12,300 crore and it seems that if the current situation continues, the ever highest cane arrear of Rs 13,000 crore would be crossed by the end of this month itself," ISMA said.
The association noted that cane price arrears generally peak by end of March every year and therefore the arrears could increase further if government does not take any steps to improve ex-mill sugar prices.
Stating that sugar prices have declined by Rs 5-6 per kg since October last year and are ruling at its lowest in the last 3-4 years, ISMA demanded that the government should immediately take a decision on continuation of incentives on production and export of raw sugar.
"Sugar mills have to produce raw sugar, for which hardly one to one and a half months are left in the current season," it argued.
Cash-starved mills have produced only 64,000 tons of raw sugar during October 2014-January 2015 of this marketing year compared to 7.93 lakh tonnes in the year-ago period.
"Delay in announcement of export subsidy has further depressed the domestic market and sugar mills in Western and Southern part of the country have started offering white sugar even below at Rs 2,400 per quintal ex-factory, and in the Northern part, ex-mill prices are ruling around Rs 2,650 per quintal," the statement said.
ISMA observed that the mills are finding it difficult to generate funds for making payments to cane growers as also to meet their day-to-day financial requirements like payment of wages, input costs, repayment of loans to banks etc.
