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News
Rs.1,600-cr aid to cane growers amid rising dues of sugar mills
Date:
03 May 2018
Source:
The Indian Express
Reporter:
ENS
News ID:
30085
Pdf:
Nlink:
WITH PAYMENT arrears to cane growers by sugar mills crossing Rs 19,000 crore, the Narendra Modi government has swung into action. The Cabinet Committee on Economic Affairs (CCEA), on Wednesday, approved the provision of financial assistance of Rs 5.50 for every quintal of cane crushed in the current 2017-18 sugar season (October-Sept).
With the country’s sugar mills projected to crush over 290 million tonnes of cane this season, the Rs 5.50 per quintal financial assistance translates into about Rs 1,600 crore.
This assistance will be paid directly into the accounts of farmers on behalf of mills that haven’t been able to pay the Centre’s fair and average price (FRP) for cane. Any amount remaining after the FRP cane dues are paid will be credited to the mill’s account.
But this assistance will come with riders. It will be “provided to those mills which will fulfill the eligibility conditions as decided by the government,” an official release stated without elaborating further.
As per the latest data, cane arrears in Uttar Pradesh have touched Rs 10,946.44 crore. The corresponding figure for Maharashtra, as on April 15, was Rs 2,277.35 crore.
The piling up of dues is mainly because of a supply glut, with India’s sugar production this season expected to cross 31.5 million tonnes (mt), over and above opening stocks of 3.8 mt.
On the other hand, domestic consumption is estimated at 26 mt, leaving huge stocks with mills and bringing down ex-factory sugar prices to Rs 27 per kg in UP and Rs 25 per kg in Maharashtra. That has made it difficult for mills to pay even the Centre’s FRP of Rs 290 per quintal (at an all-India average sugar-to-cane recovery of 10.8 per cent), leave alone the higher state advised price (SAP) of Rs 315 for ‘normal’ and Rs 325 per quintal for ‘early’ cane varieties.
“At current sugar realisations of Rs 27 per kg and applying the Rangarajan formula of paying farmers 75 per cent of that, we can afford a cane price of just over Rs 200 per quintal. That still leaves a gap of Rs 115 per quintal. The Rs 5.50 per quintal assistance is not going to really help,” said a UP miller, who did not want to be named.
However, Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories, welcomed the Cabinet’s decision. “The industry required some tonic. Today’s decision at least shows the intent of the Government of India,” he said.
The last time that the Modi government resorted to a similar package was in November 2015. At that time, the government provided what it termed as a “production subsidy” of Rs 4.50 per quintal. That subsidy was, however, conditional on mills meeting at least 80 per cent of targets for exports and supply of ethanol for blending with petrol.
“This time also, they are likely to link the financial assistance to our meeting minimum sugar export and ethanol supply quotas,” an industry source noted. The Modi government has already fixed mill-wise minimum indicative export quotas totalling 2 mt for 2017-18. Shipping out this quantity is seen as a means for easing the current domestic glut situation.
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