The sugar industry has urged the government not to address falling prices by introducing the regulated release mechanism, which dictates how much sugar factories can sell in the open market on a monthly basis.
In a letter written to the consumer affairs, food and public distribution ministry, the Indian Sugar Mills Association (ISMA) said that the sugarcane price to be paid by mills should be calculated on the basis of the revenue realised from sugar and its by-product, and not the fair and remunerative price or FRP fixed by the Centre.
The association cited 36 million tonnes of sugar stock, including 4 million tonnes of carry-over stock from the previous year, anticipated poor export opportunity at just 1-2 million tonnes and a stable domestic consumption of 25 million tonnes in favour of its appeal. Since sugar mills already owe ₹21,000-22,000 crore to farmers in arrears, there is a need to increase cash flows to the mills which can come only through sales, said an analyst at a multinational sugar company.
The industry hopes the government will create a buffer stock, have a fixed minimum support price for sugar and push exports.
“Before the sugar decontrol in 2013, the government used to fix the sale quota of each sugar mill for every month or quarter. There was not much by way of sales and it ensured prices were stable. The current problem is due to expected carry-over stock of 10 million tonnes by October 2018 and the solution lies in addressing the problem of excessive sugar and not controlling sales,” said the analyst, who did not wish to be identified. In the letter, written to the food secretary, Department of Food and Public Distribution, ISMA said that sugar mills were under pressure to pay the farmers and banks and were simultaneously facing storage problems.
“The government should stop fixing the FRP as it has increased 96% in the past eight years since 2009-10,” ISMA said in the letter. “The increase is higher than the MSP for other crops. FRP for sugarcane is already 100% higher than the paid out cost plus family labour expenditure (A2+FL), calculated by the Commission for Agricultural Cost and Process for Maharashtra and Uttar Pradesh.”
ISMA said the cane price payable by sugar mills should be determined automatically at 70-75% of revenue from sugar and not at 90-100% as it was done now.
“There has to be a clear message to sugarcane farmers to stop growing more and there is a need for them to realise that prices are not supporting such surplus crop,” it said.