The sugar industry has called for a rationalised cane price policy across the country, in the wake of cane price arrears crossing Rs 19,000 crore and about 3 million tonnes of surplus stock pulling the prices down in the market.

Abinash Verma, director general, Indian Sugar Mills Association, told reporters that today the sugar industry was uncompetitive due to high cost of production of sugar. Sugar mills in India pay the highest cane prices in the world.

He wanted the government to link cane price to revenue realisation.

According to mill owners, they are forced to sell their produce at whatever prices they get, to keep themselves afloat and also due to lack of an alternative market, which could fetch them a better price.

He noted that this is the fifth consecutive year of surplus production and the closing balance as on September 30 this year, i.e., at the end of current sugar seasons of 2014-15, is expected to be 9 million tonnes. This is more than 3 million tonnes than the normative sugar requirement needed to maintain the supplies at the beginning of the next season.

“Unless this surplus absorbed quickly, it will continue to batter the sugar prices and bleed the sugar industry,” said Verma, adding that the prices are trading at their lowest levels in almost seven years and during the last six months alone (from the beginning of the current sugar seasons of 2014-15), the ex-mill sugar prices have fallen by around Rs 7,000 a tonne of sugar.

As a result of low realisation from sugar, the mills are unable to recover their costs.

According to him the cane price arrears as on March 31, 2015 crossed a whopping of Rs 19,000 crore compared to Rs 13,100 crore, a year ago and debt of the industry was at Rs 36,601 crore in 2012-13.

"Total working capital of Rs 27,000 crore is blocked due to the current fall in prices of sugar," claimed Verma.