India's sugar production has touched an all-time high of 29.98 million tonnes till April 15 in the current season on higher cane output, leading to a surge in arrears to farmers at over Rs 20,000 crore, according to industry body ISMA.
The association demanded that the government should provide production-linked incentive to cane farmers as it was done in 2015-16 marketing year.
Sugar marketing year runs from October to September.
Sugar output of India, the world's second largest producer, stood at 20.3 million tonnes in the 2016-17 marketing year. The annual domestic demand is estimated at 25 million tonnes.
"Sugar production in the current season up to April 15, 2018, has crossed the expected levels and the Indian sugar industry has already produced 299.80 lakh tonnes," Indian Sugar Mills Association (ISMA) said in a statement.
As many as 227 sugar mills were still crushing sugarcane.
Crushing operations are almost over in Karnataka and only one sugar mill was operational as on April 15, 2018. The state has so far produced 3.63 million tonnes of sugar.
"The actual sugar production up to April 15, 2018, is already 5 million tonne more than the estimated sugar consumption for the whole season up to September 30, 2018," the association said.
On bumper production, ISMA said sugar prices have been under severe pressure in the last 4-5 months and have fallen by Rs 9 per kg across the country. As compared to the cost of production, the current ex-mill sugar prices are around Rs 8 per kg lower and the sugar mills are incurring substantial losses.
"Inability to pay cane price because of highly depressed sugar prices, has translated into huge cane price arrears of farmers. As on March 15, 2018, the cane price arrears reported to the government was already over Rs 18,000 crore across the country," ISMA said, adding that arrears could have crossed Rs 20,000 crore now.
To clear outstanding payment, the association demanded that the government should bail out mills and farmers as it did in 2015-16.
Like 2015-16 sugar season "when the Modi Government helped the sugar mills and sugarcane farmers with Rs 4.50 per quintal of sugarcane as part of FRP, there is an immediate need for the government to pay a part of the FRP once again in the current year when the distress is even greater", ISMA said.
According to the government data, outstanding payments to sugarcane farmers stood at Rs 18,044 crore as of April 12 of which Rs 8,869 crore was owed by mills in Uttar Pradesh. Karnataka millers owed Rs 2,420 crore while Maharashtra factories were to clear Rs 2,213 crore farmers' dues.
India's largest sugar firm Bajaj Hindustan has the maximum outstanding of Rs 2,709 crore based on the cane price fixed by the UP government. Modi Group, which has two mills in UP, owed Rs 514 crore, followed by Mawana Sugars Rs 436 crore, Simbhaoli Sugars Rs 383 crore and Rana Sugars Rs 364 crore, a senior food ministry official told reporters.