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Cane arrears had increased to Rs 14,000 crore till January and might touch a record level by the end of this month because of fall in sugar prices and huge unsold inventories, industry body ISMA said today.
To improve liquidity of millers, the government should remove export duty of 20 per cent and allow shipment of 2 million tonnes immediately, it said in a statement.
As per the ISMA data, mills have produced 25.80 million tonnes sugar till March 15 of the 2017-18 marketing year (October-September), as against the target is 29.5 MT.
The top three sugar producing states Maharashtra, Uttar Pradesh and Karnataka — contributed 9.38 MT, 8.43 MT and 3.51 MT.
Sugar output in India, the world’s second largest producer after Brazil, stood at 20.3 MT in the 2016-17 marketing year.
Expressing concern over falling prices, Indian Sugar Mills Association (ISMA) said sugar mills are incurring losses as prices are ruling below the cost of production of around Rs 3,500-3,600 per quintal.
“They are unable to pay cane price to the farmers on time.”
Ex-mill sugar prices have once again started plummeting and are now hovering between Rs 2,900 per quintal in western and southern states and Rs 3,000 per quintal in northern states, it said.
As per the official data, cane price arrears of farmers across the country were about Rs 14,000 crore as on January 31 this year.
The crushing season in full swing in most of the states, ISMA said.
It added: “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 gets sold and the rest gets stocked as unsold inventories, it is estimated that cane price arrears at the end of March 2018 may touch record levels and become uncomfortable.”
Since sugar production in the current and the next year will be surplus, ISMA said that the government should enable mills to dispose of some of surplus stocks.
“Government needs to remove export duty of 20 per cent on sugar with immediate effect, as also announce two million tonnes of sugar to be exported under minimum indicative export quotas (MIEQ) as was done in 2015-16,” it said.
The government should also announce export of 4-5 million tonnes of raw sugar well before the start of next season, so that millers could plan, produce and export raw sugar from the beginning of the next season as it will reduce the burden on sugar mills carrying higher inventories for a longer period, it explained.