New Delhi: Sugar production in India is likely to be 26.1 million tonnes in 2017-18, the Indian Sugar Mills Association (ISMA) said on Thursday, raising its production forecast for the year by 4%. In early January ISMA had estimated production at 25.1 million tonnes.

The latest estimate implies a 29% increase in sugar output year-on-year, from 20.3 million tonnes in 2016-17. Surplus production could lead to a decline in wholesale prices and pending payments to cane farmers.

As of 15 December, Rs7,500 crores was due to cane farmers across India, according to ISMA. The current dues are lower than the dues of over Rs21,000 crore seen in 2015 following years of surplus production.

Higher production in the 2017-18 sugar season (October to September) is due to better rains in growing areas and new varieties cultivated in Uttar Pradesh. India’s annual consumption of the sweetener is estimated at 25 million tonnes, leaving room for exports.

“Several sugar mills were unable to pay cane price to the farmers because of the recent fall in sugar prices which have started falling below the cost of production," ISMA said in a statement. It added that “there was concern about sugarcane farmers getting affected due to their cane price arrears accumulating."

Increasing dues to cane growers will worsen farm distress in states like Uttar Pradesh, Maharashtra and Karnataka where falling prices of crops like pulses and oilseeds have led to a dip in farm incomes.

To deal with the problem ISMA said it met the government twice this week. According to the association the government could initiate steps like mandating sugar exports for every mill. According to its statement, ISMA also requested the government to raise import duties to 100% (from the current 50%) to stop imports from Pakistan.

ISMA said it is exploring possibilities of preferential import duties for Indian sugar for exports to neighbouring Bangladesh and Sri Lanka. “If this happens early, it will ensure that all the extra stocks from India can get disposed of very fast," ISMA said.