Civil aviation minister and Rashtriya Lok Dal president Ajit Singh has sought Prime Minister Manmohan Singh’s help for sugarcane farmers in Uttar Pradesh. The minister has proposed an interest subvention scheme similar to the one in 2007-08 for the farmers and recommended incentives for the export of 30 lakh tonne of sugar.
The sugar millers have been pushing the UP government for interest-free loans.
Singh’s letter to the PM is being seen as a deft move by the RLD before the general elections. The party has a strong base in the cane-producing western UP districts.
“The sugar industry is the largest industry of UP, providing employment to a large section of the people there. The country’s top sugar-producing companies are also here. However, last year, farmers of UP suffered the highest cane price arrears of R6,000 crore, which is historically the highest ever,” Singh said, adding that of this, R2,400 crore has been carried forward to the new crushing season that is yet to begin. “This is the first time that such a huge arrear is getting carried forward into the new season.”
Batting for the millers, Singh stressed on depressed sugar prices, which is making matters worse.
He said the problem is being compounded by the fact that banks are not showing interest or have already intimated that they will not be in a position to extend working capital loans.
“The sugar industry incurred a cash loss of R3,000 crore in 2012-13 and another R1,000 crore in the year prior to that. The main reasons for the losses are said to be depressed sugar prices due to the surplus sugar produced across the country during the last three seasons (2010-11-2012-13) in a row and yet another surplus year expected in 2013-14,” he said, adding that sugar stocks are at one of the highest levels now, and will cross 100 lakh tonne by 2013-14. This, he said, will block R30,000 crore of cash flow.
“Unless efforts are made to reduce the surplus to manageable levels and the mills are financially assisted, the sugar industry will struggle for liquidity,” he said, stressing that the mills fear higher losses in 2013-14. “The cane price of farmers in UP will therefore fall into arrears again and will cross last year’s record arrears of R6,000 crore.
“It is important to protect our small and marginal cane farmers by ensuring that they get paid their dues on time,” he said, suggesting some immediate remedial steps such as the export of 30-40 lakh tonne of sugar in the next 8-10 months.
“Since global sugar prices are depressed and sugar export from India is unviable, the Centre should announce incentives to target 30 lakh tonne of exports, similar to the one done in the 2006-07 and 2007-08 seasons.”
“Also, since sugar is already in surplus, there is no reason to import cheap sugar in the country from Brazil and Pakistan. Import duty on sugar should be increased from 15% to between 40-60% immediately,” he said.