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Houston — Sugar mills in the Indian state of Maharashtra, which has had a bumper crop of sugar, currently owe Rupee 5.93 billion ($86 million) in arrears to farmers, according to a report by Moneycontrol.

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Despite efforts by the state government to have millers clear all dues, the mills still maintain Rupee 5.93 billion worth of arrears, versus only Rupee 20 million in arrears in the 2016-17 crop year, according to an official from the Maharashtra sugar commissioner's office.

Despite the relatively high levels of arrears, State sugar commissioner Sambhaji Patil noted that the threat of action against delinquent mills has helped bring down arrears from Rupee 8.5 billion on July 18 to Rupee 5.93 billion by the end of July.

Patil noted that the establishment of a price floor for the selling price of sugar, as well as the use of a Fair and Remunerative Price for sugarcane, has helped to stem the losses incurred by mills, which were previously more vulnerable to market fluctuations, the report said.

Furthermore, the Indian government has implemented other measures to ease the financial pressure on sugar mills, including allowing the production of ethanol from cane juice, B-grade and C-grade molasses, to encourage mills to divert sugar production capacity to ethanol, according to the report.

Total Indian sugar production during the 2017-18 crop year will reach 31.5 million mt, versus annual demand of 25 million mt, according to data from the Indian Sugar Mills Association.

--Jordan Young, jordan.young@spglobal.com

--Edited by Derek Sands, derek.sands@spglobal.com