Restrictions on sugar sales, low prices and bumper sugar production have pushed cane arrears towards a record high and the arrears have already crossed ₹14,000 crore till the end of January, according to a statement issued by the Indian Sugar Mills Association (ISMA) on Monday.
“As per the figures available from Cane Commissioners of major sugar producing States and the Centre, cane price arrears of farmers across the country were about ₹14,000 crore as on January 31, 2018. With the crushing season in full swing in most of the States, considering the trend of cane price paid by the sugar mills in February and March in the last five sugar seasons, and the fact that only 30 per cent of sugar produced in these months get sold and the rest get stocked as unsold inventories, it is estimated that cane price arrears at the end of March 2018 may touch record levels and become uncomfortable,” the ISMA statement said.
Output on the rise
Sugar mills in the country have so far produced 25.8 million tonnes (mt) of sugar till March 15, which is nearly 47 per cent more than sugar output during the corresponding period last year, ISMA said. Nearly one-fifth of total 523 sugar mills – 106 mills – have already completed crushing operations.
An earlier report by the rating agency ICRA had said that domestic sugar production during the current sugar season (October 2017-September 2018) would be around 29.5 mt, which is 40 per cent over the previous season. This is primarily due to higher-than-expected sugar production in Maharashtra, UP and Karnataka.
While Maharashtra has so far produced nearly 9.4 mt of sugar, followed by sugar mills in UP which produced over 8.4 mt and Karnatala mills with 3.5 mt of sugar, the statement said. The mills in other States contributed around 4.5 mt during the same period.
Prices drop
According to ISMA, ex-mill sugar prices have once again started plummeting and are now hovering between ₹2,900 per quintal in western and southern States and ₹3,000 per quintal in northern States. Sugar mills are incurring losses as compared to their cost of production of around ₹3,500-3,600 per quintal. This has resulted in mills not being able to pay cane price to the farmers on time, the industry body said.