The government is believed to have asked sugar manufacturers against speculation in the futures, as it disfavours a further price spiral from the current level in view of the impending assembly polls in five states, including Uttar Pradesh and Punjab. “We are ready with all measures that are needed to control prices. Once the production of sugar this year is re-assessed, the measures will be rolled out,” an official said. The government has already sent a message to the sugar mills that they should keep prices under control, as it did not want to take any drastic steps, he said. The proposals under consideration are to scrap the current import duty of 40 per cent, imposition of stock holding limits on millers and restriction on futures trading, sources said. “I don’t think zero import duty is advisable at this stage. Instead, it will be a good step to focus on anti-hoarding measures or ask mills to sell certain quantity,” said Sudhir Panwar, member, Planning Commission, Uttar Pradesh. He said the government should control the sugar market, as it is a very sensitive commodity. “Sugar mills are now able to just recover their costs,” an industry official said, adding that retail prices depend on various factors, including logistics. According to Indian Sugar Mills Association (ISMA), with the increase of cane price by states like Uttar Pradesh, Punjab, Uttarakhand, Haryana, Bihar and Tamil Nadu and with the withdrawal of subsidies and incentives given last year for cane payment, the cost of production of sugar in these states have increased, as compared to last year. Adding to the woes is lower capacity utilisation by mills in Maharashtra, Karnataka, Telangana and Tamil Nadu, leading to increased per unit conversion cost of sugar, ISMA said. Overall, the average cost of production of sugar on an all India basis has increased by Rs 3 to 4 per kg over last year. The all India average ex-mill price of sugar is hovering around Rs 36 per kg, while the average cost of production is estimated at Rs 36.50 per kg, according to ISMA data. Panwar cited a recent wheat tender by the Food Corporation of India under the open market sales (OMS) scheme where the difference in offered price between two places in Jammu and Kashmir is more than Rs 7 a kg. According to the FCI te-nder on January 16, the reserve sale price of wheat in Jammu is Rs 16.85 a kg and in Phyang at Rs 23.53 a kg. In the first three months of the current sugar season (Oct - Dec, 2016), mills have sold 59.8 lakh tonnes of sugar in the open market, as against 65.3 lakh tonnes during the corresponding period last year. It means sales have dropped by 5.5 lakh tonnes, the official said. ISMA has estimated that the demand may remain the same as last year in the remaining nine months of the season or may improve slightly from the current level. Even after this, the total domestic sales in 2016-17 season would be around 245 lakh tonnes, as against 248 lakh tonnes in 2015-16. Even as the government will reassess its 225 lakh tonnes sugar production estimates for this year at the next meeting of the cane commissioners on January 24. The total output this season starting from October 1, 2016 until January 15, declined to 104.80 lakh tonnes from 110.72 lakh tonnes in the year-ago period. This year, 399 sugar mills are currently operational against 492 factories, which were active on January 15, 2016, ISMA said. In Maharashtra, a total of 149 sugar mills started crushing for 2016-17, out of which 56 sugar mills have already closed their operations due to lower cane availability. Most of the sugar mills, which have closed in the state, are from drought-affected districts of Solapur, Ahmednagar and in the Marathwada region. Maharashtra has produced 31.43 lakh tonnes of sugar, as compared with 43.79 lakh tonnes last year. Sugar mills in Kolhapur, Satara and Sangli, which together contribute about 40 per cent of the state’s production, are expected to continue crushing until the end of March 2017. In Uttar Pradesh, 116 sugar mills in operation during the current 2016-17 period have produced 35.50 lakh tonnes between October 1 and January 15, which is 31 per cent higher than last year’s production. The other major sugar producing state Karnataka has produced 18.50 lakh tonnes, down from 21.15 lakh tonnes a year ago. ISMA said on the basis of satellite images of cane area harvested and remaining cane in the fields across the country, it would review its first advance production estimates of over 230 lakh tonnes on January 25.