Sugar mills in India produced 194 lakh tonnes (lt) of the sweetener up to February 28, about 23.6 lt more than at the same time last season (October-September), as per the latest estimates released by the Indian Sugar Mills Association (ISMA) on Tuesday.

The association warned that with lower sugar prices this year, sugarcane arrears, which stand at Rs 14,500 crore this year, will likely rise despite the industry’s oft repeated demand for an export subsidy on raw sugar being approved by the Centre recently for 14 lt at Rs 4,000/tonne.

The outstanding payments owed to cane farmers for the 2014-15 season have already surpassed peak arrears of Rs 13,000 crore last season. For the 7.5 lt exported last season between March and September under the incentive scheme, ISMA expects payments to be made this month.

“The government notification is awaited. Meanwhile, global prices have fallen and demand for raw sugar for export purposes is on the lower and will flow in as and when global prices improve by even 50 points,” it said in a statement.

Maharasthra, UP lead the way

While 511 mills had undertaken crushing operations this season, 455 mills produced 170.43 lt in 2013-14.

Maharashtra, the country’s largest sugar producing State, had 177 mills operating which produced 74 lt, against 129 mills which recorded an output of 57.54 lt last season. Around 49.6 lt had been produced by 118 mills in Uttar Pradesh at the end of February, against 43.4 lt last year. Mills in Bihar produced 4.75 lt this season as compared to 3.73 lt last year.

In Karnataka, 63 mills recorded an output of 32.8 lt as compared to 30.94 lt produced by 56 mills last season. Mills Tamil Nadu, Andhra Pradesh/Telangana and Gujarat registered a decline in output to 4.6 lt, 7.3 lt and 8.4 lt as against 6.5 lt, 7.72 lt and 8.64 lt respectively.

Ethanol quandary

The association said a government condition made it mandatory that mills having ethanol production capacity will need to supply 25 per cent of their alcohol production as ethanol for the blending programme, to be eligible for the export incentive.

It estimated that of 100 cooperative mills in Maharashtra, 60 do not have distilleries and would not benefit from the scheme. Of the rest, more than half had already started supplies.

“The condition will at best impact five to eight sugar mills in Maharashtra who have an opportunity to participate in ethanol supplies against the EoI expected to be floated by OMCs in the latter part of March,” it said.

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