The country's sugar production fell 3.45% to 23.75 million tonne (mt) in the first seven months of the 2013-14 season as output declined in key states, industry body ISMA said on Tuesday.
The Indian Sugar Mills Association (ISMA) also said cane arrears are set to pile up to over R12,000 crore this season due to falling prices and the government's delay in fixing the subsidy for export of raw sugar.
Mills produced 23.75 mt of sugar till April of the October-September season compared with 24.6 mt in the corresponding period last year, ISMA said. The current sugar crushing season has almost come to an end and only about 80 of the country's 504 mills operated on April 30, it said in a statement.
ISMA has pegged sugar output at 23.8 mt for this season compared with 25.1 mt last year.
Output in Maharashtra, the leading sugar producing state, fell to 7.65 mt till April from 7.98 mt in the year-ago period, according to ISMA data. The rate of sugar recovery from crushed cane was 11.4%.
In Uttar Pradesh, the country's second-biggest producer, output declined sharply to 6.41 mt from 7.48 mt. Sugar recovery was 9.27%.
Production in Karnataka was the highest ever at 4.17 mt as against 3.4 mt a year earlier. Sugar recovery in the state was 10.99%. Sugar production in Gujarat rose 4% to 1.18 mt till April, while output in Andhra Pradesh touched last year's level of 9,90,000 tonne, ISMA said. Production in Tamil Nadu was down 30% at 1.08 mt so far this season.
ISMA said mills owed more than R10,000 crore to sugarcane farmers as of April 30, the highest level ever.
If the dues remain unpaid in the coming months, they could rise to over R12,000 crore, which is almost 20% of the total cane price payable in the current season, it said.
With sugar prices falling in the past fortnight, the chances of cane arrears getting cleared early seem remote, it added. Wholesale prices declined by R2-3 per kg to R33 per kg in the past fortnight, ISMA said.
The industry body said the sanction and disbursement of interest-free loans to help pay farmers has been slow and only about 50% of the intended loans have been received.
ISMA said the delay in announcing the incentive for export of raw sugar for April-May is keeping Maharashtra, Karnataka and Tamil Nadu millers in uncertainty. They had raw sugar stocks of about 6 lakh tonne at the end of March 31. Export contracts finalised on the expectation of R3,300 per tonne as incentive are not being executed, burdening the domestic market with extra sugar, it added.