India's sugar production rose by 47 percent to 42.25 lakh tonnes till December 15 of this marketing year, which started in October this year, leading to a fall in ex-factory prices of the sweetener.
Sugar production of India, the world's second largest producer and biggest consumer, stood at 28.77 lakh tonnes in the year-ago period.
"Sugar production upto 15th December 2014, in the current 2014-15 sugar season is 42.25 lakh tonnes," Indian Sugar Mills Association (ISMA) said in a statement.
The association attributed the increase in sugar output to early start of crushing compared to last year.
As against 426 sugar mills which were crushing sugarcane on 15th December last year, ISMA said 442 sugar mills have started their operations as on December 15, 2014.
Maharashtra has produced 20.73 lakh tonnes of sugar so far as compared to 12.96 lakh tonnes in the year-ago period. "7.94 lakh tonnes of sugar has been produced by UP sugar mills in the current season upto 15th December, 2014, ascompared to 3 lakh tonnes in the corresponding period last year," ISMA said.
The association also said that ex-mill sugar prices have been continuously falling almost on a daily basis in the range of Rs 10-40 per quintal.
"The current ex-mill prices are at its lowest in the last 3 years and around Rs 500-700 per quintal below the cost of producing the sugar.
"Therefore, mills are facing huge challenges to even be able to pay the FRP (Fair and Remunerative Price) of Rs 220 per quintal of sugarcane linked to 9.5 per cent sugar recovery," ISMA said.
The industry body feared that if the ex-mill sugar prices remain at this level, cane price arrears of farmers may start getting accumulated.
"Since ex-mill sugar prices are lower than last year but the sugarcane prices are higher, the cane price arrears which had crossed Rs 12,500 crore in March 2014, in the last sugar season may be higher unless the sugar prices improve," ISMAsaid.
ISMA also said that it was anxiously waiting for the announcement of continuation of the incentive scheme on raw sugar production and exports soon, so that mills could produce raw sugar for the purpose.
According to ISMA, the sugar production is estimated to rise to 250-255 lakh tonnes in 2014-15 marketing year as compared to 244 lakh tonnes in the previous year. The annual domestic demand is pegged at 230-240 lakh tonnes, while the opening stock was 75 lakh tonnes at the start of the current marketing year.
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