India's sugar production rose by 15 per cent to 26.35 million tonnes so far during the current marketing year, resulting in fall of ex-factory prices to seven-year low and a surge in cane arrears to nearly Rs 20,000 crore.
Releasing the production data, the Indian Sugar Mills Association today said the the output will cross 27 million tonnes in the full 2014-15 marketing year (October-September) against 24.3 million tonnes in the previous year.
The annual domestic demand is pegged at 24.8 million tonnes India, which is the world's second largest producer and biggest consumer.
"As on April 15, 2015, sugar mills across the country have produced 26.35 million tonnes of sugar. This is 3.2 million tonnes higher than the sugar produced during the corresponding period of 2013-14 sugar season," ISMA said in a statement.
In Maharashtra, production rose to 9.96 million tonnes till April 15 as against 7.44 million tonnes in the year-ago period, while in Uttar Pradesh the output increased to 6.78 million tonnes from 6.25 million tonnes during the period under review.
Stating that the domestic ex-mill sugar prices have fallen
by Rs 8-9 per kg since October 2014, ISMA said the prices are "at the lowest in the last seven years".
Rates are below the cost of production by Rs 7,000-9,000
per tonne of sugar.
With cane price arrears remaining pending at Rs 19,300 crore, ISMA said: "the situation is alarming"
It demanded that measures need to be taken to improve ex-factory sugar prices, liquidate surplus stock of about 3.5 million tonnes and availability of bank loans to millers.
"Only if the surplus 3-3.5 million tonnes is disposed off
and the burden is taken away from the mills, will the cane price arrears of farmers get cleared and the ex-mill sugar prices will improve at least to what it was at the beginning of the current sugar season," ISMA said.
Stating that proposed hike in import duty on sugar from 25
per cent to 40 per cent would be helpful only in the longer run, the industry body demanded that the government should buy 3 million tonnes of sugar to address the current problem.
"...The request of the industry and the demand of the farmers that the government should buy 3 million tonnes of sugar should be approved. This will give around Rs 9,000 crore of cash flows to the industry, which can go directly to the farmers," it said.
ISMA feared that prices might fall further and cane price arrears would continue to remain at a high level if the government does not purchase the surplus sugar.
