New Delhi, May 2 (PTI): The government today decided to free sugar exports, to help mills clear cane arrears of over Rs 10,000 crore to farmers, and set up a panel on handling surplus foodgrain in case of a storage crunch.

In a meeting chaired by Prime Minister Manmohan Singh, the government also decided to scrap the minimum export price of onion, which will fetch growers more income.

“Sugar exports are freed and it is brought under the open general licence scheme. There will be no quantitative restriction and we will stop exports when it touches a particular level,” a high-level source said.

The food ministry has been following a policy of allotting an export quota to mills based on average output in the last three years. The Centre has allowed 2 million tonnes of exports this year.

The meeting follows agriculture minister Sharad Pawar’s letter to Singh raising objections to the government policies on farm commodities such as sugar, cotton and milk products.

Coming under pressure from Pawar and the Congress party, the government earlier this week had allowed cotton exports without any quantitative cap and lifted the ban on casein exports.

Besides Pawar, finance minister Pranab Mukherjee, food minister K.V. Thomas, commerce minister Anand Sharma, PMEAC chairman C. Rangarajan and Planning Commission deputy chairman Montek Singh Ahluwalia attended the meeting.

Apprehending that a storage crunch would damage foodgrain during the monsoon, it was also decided to set up a panel, headed by Rangarajan, to recommend ways to handle surplus foodgrain lying in the central pool.

The committee, comprising officials from agriculture, commerce, food and finance ministries, has been asked to submit its recommendations as soon as possible.

The country is estimated to have produced a record 103.41 million tonnes of rice and 90.23 million tonnes of wheat in the 2011-12 crop year (July-June).

The committee will look into the food ministry’s proposal to distribute 14.5 million tonnes of foodgrain to ration card holders, besides recommending export grain policy, sources said.