Sugar output jumps 49%; mills unable to pay growers

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Sugar output increased 49 per cent to 28.18 million tonne (MT) so far in 2017-18 marketing year, but mills are unable to make cane payment to growers owing to low prices, industry body ISMA said today.

Consequently, total cane arrears are estimated to have reached Rs 16,200 crore as on March 31 of the current marketing year (October-September). Of this, Uttar Pradesh has maximum arrears at Rs 7,200 crore, it added.

Indian Sugar Mills Association (ISMA) has pegged sugar output at 29.5 MT in 2017-18 marketing year, as against 20.3 MT last year.

"Considering lower sugar realisation from domestic sales as well as depressed global sugar market, sugar mills are unable to generate sufficient funds for payment of cane price to farmers on time," ISMA said in a statement.

The domestic ex-mill price of sugar has crashed and is hovering at about Rs 3,000 per quintal, about Rs 500-600 per quintal below the cost of production, due to an unexpected surplus availability, it said.

Moreover, the world sugar market is depressed and importers are quoting USD 350 per tonne FOB (freight on board) for Indian sugar even as the Centre has allowed export of 2 MT, it added.

As per the latest ISMA data, mills have produced 28.18 MT sugar till March of this marketing year as against 18.88 MT in the year-ago period.

While sugar production in Maharashtra increased to 10.12 MT, Uttar Pradesh recorded 9.54 MT output and Karnataka 3.55 MT. These are top three sugar producing states in the country.

ISMA said 193 mills out of 534 have stopped crushing operations and the remaining 331 were functioning till March-end. Few more mills in Maharashtra and Karnataka might end crushing in a couple of days.