India's sugar production fell by 5 percent to 10.48 million tonne till January 15 of the current marketing year that started in October, due to decline in cane output on account of drought in some parts of producing states like Maharashtra, according to industry data.
The sugar marketing year runs from October to September.
"During the current 2016-17 sugar season, sugar mills in the country have produced 104.80 lakh tonnes of sugar till 15 January 2017, 5.92 lakh tonnes less than the sugar production of last year on the corresponding date," Indian Sugar Mills Association (ISMA) said in a statement.
As on January 15, 2017, 399 sugar mills were operating as compared to 492 sugar mills last year.
Giving state-wise production data, ISMA said sugar output in Maharashtra fell to 31.43 lakh tonnes till January 15 of the 2016-17 marketing year from 43.79 lakh tonnes in the corresponding period of the previous year.
Out of 149 mills that started crushing operations in this season, 56 sugar mills have closed their operations by January 15, 2017 and remaining 93 mills are operating.
"Most of the sugar mills which have closed in Maharashtra are from drought affected districts namely, Solapur, Ahmednagar, Marathwada region and parts of Pune," ISMA said.
Sugar mills in three major districts which will contribute about 40 percent of the state's sugar production this year, namely, Kolhapur, Satara and Sangli continue to crush sugarcane in full swing and most of them are expected to continue their operations till March-end.
In Uttar Pradesh, sugar production rose by 31 percent to 35.5 lakh tonnes till 15 January, 2017 compared with the year-ago period.
Karnataka has produced 18.5 lakh tonnes till 15th January, 2017 as against 21.15 lakh tonnes till January 15, 2016.
ISMA has pegged the country's sugar production at 23.37 million tonnes for the 2016-17 marketing year, down 7 per cent from last year.
The association pointed out that sugar sales have dropped by 5.5 lakh tonnes during October-December period of 2016 to 59.8 lakh tonnes.
"...total domestic sales in the country in 2016-17 sugar season could get restricted to around 245 lakh tonnes, as against 248 lakh tonnes dispatched by mills in 2015-16 sugar season," it said.
With the increase of cane price by state governments of Uttar Pradesh, Uttarakhand, Punjab, Haryana, Bihar and Tamil Nadu and withdrawal of incentives on cane payments, ISMA said the production cost in these states have increased.
"Furthermore, due to drought conditions in Maharashtra, Karnataka, Telangana and Tamil Nadu, capacity utilisation of sugar mills during the current season has come down, leading to increased per unit conversion cost of sugar.
"Overall, the average cost of production of sugar on an all India basis has increased by Rs 3-4 per kg in the current 2016-17 sugar season over last year. The average cost of production will, therefore, work out to around Rs 36.50 per kg of sugar," ISMA said.
The all India average ex-mill price of sugar are hovering around Rs 36 per kg against the average cost of production of sugar at around Rs 36.50 per kg.
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