New Delhi, March 10 (IANS) Sugar mills in India are incurring heavy losses and might be forced to delay payment to farmers as domestic prices fall below the cost of production, officials said Thursday.

"On per quintal (100 kg) sale of sugar, we are incurring a loss of around Rs.200. Most mills are not in a position to pay farmers," Indian Sugar Mills Association President Narendra Murkumbi told reporters.

Murkumbi, who is also the managing director of Shree Renuka Sugars Limited, said sugar producers should be allowed to export their surplus produce to keep prices at a reasonable level.

He said the cost of production of sugar in Uttar Pradesh is around Rs.2,950 per quintal while it is sold at around Rs.2,800 per quintal, resulting in a net loss of Rs.150 to the mill owners on sale of every quintal of sugar.

Similarly in Maharashtra, the cost of production is over Rs.2,750 per quintal, while sugar is sold at Rs.2,600 per quintal.

Sugar output in India is estimated to increase to 25 million tonne in the current fiscal as compared to 18.9 million tonne in the previous year.

"We have an exportable surplus of almost three million tonnes. Prices are good in the international market. It is unfortunate that we are not allowed to exploit the opportunity," said Indian Sugar Mills Association director General Abinash Verma.