NEW DELHI – After a gap of 10 years, the central government has asked the Tariff Commission to come up with the actual cost of production of sugar after reviewing the full performance of mills during 2017-18 (Oct-Sep), an industry source said.

 

The government has sought data for each sugar mill from the industry, including details on cane crushed, cost of the chemical components used in production of sugar, the actual cost of handling and transporting cane, and the total revenue from sugar and its by-products, the source said.

 

The government had last asked the commission to calculate the cost of sugar in 2009-10 after reviewing data for 300 mills. The number of sugar mills in the country has since increased to more than 500.

 

The sugar sector is in the midst of a crisis, as prices have been ruling below the cost of production of 35-36 rupees a kg for nearly two years due to higher production. Due to lower prices of the sweetener, mills are not able to pay for cane purchased from farmers. As of May 10, their cane arrears stood at 239 bln rupees.

 

The sugar industry has been asking the government to raise the minimum selling price of sugar from the current 31 rupees a kg to help mills improve their financial health.

 

Though the calculation of actual cost of sugar will require a lot of time, as data from at least 400 mills is likely to be considered to come up with an accurate cost, it will be a "ray of hope" for sugar mills, another industry official said.

 

"Even if cost of production comes to 34 (rupees per 100 kg) as per government calculation, we will be happy as it will near 35-36 (rupees) which is industry's calculation," the source said.