If the present government is serious about direct benefit transfers (DBT) to farmers, it should start off with sugar, according to A Vellayan, chairman of the Rs 24,350 crore Murugappa Group and president of the Indian Sugar Mills Association (ISMA).

Sugar mills, he noted, are already making payments to cane growers through banks. Most mills today have data on the quantity of cane supplied by each of their 15,000 to 20,000 farmers. This data is used by banks to credit cane payments directly to the accounts of individual farmers.

“Unlike in other crops, DBT is eminently feasible in the case of sugarcane where mills already have created systems for payment into the banks accounts of farmers. The government can use this to help cane farmers in view of our difficulties in paying even the Centre’s fair and remunerative price (FRP) this year”, Vellayan told presspersons here on Friday.

The cane FRP has been raised from Rs 170 per quintal in 2012-13 to Rs 220 for the current 2014-15 crushing season (October-September), whereas average ex-factory sugar prices during the same period have fallen from Rs 3,148 to Rs 2,700 per quintal.

“Since the start of this season in October, ex-mill prices of sugar have dropped from Rs 3,000-3,050/quintal to Rs 2,700-2,750/quintal in Uttar Pradesh, while declining from Rs 2,750-2,800 to Rs 2,450-2,500 in Maharashtra. We are struggling to pay even the Centre’s FRP, forget the higher State Advised Prices (SAP) declared by some state governments”, Vellayan said.

The Centre, he added, cannot keep raising the FRP even while sugar prices are falling. “The FRP should be fixed based on the Rangarajan committee formula of linking it to the sugar price. If the Centre wants to pay farmers anything above the formula-based FRP (70 per cent of sugar realisation, which will now work out to Rs 190/quintal), it should do so through DBT. The states should also follow the same route vis-à-vis the SAP”, he said. ISMA expects sugar production for 2014-15 at 260 lakh tonnes (lt), as against domestic consumption of 247-248 lt.

If the present government is serious about direct benefit transfers (DBT) to farmers, it should start off with sugar, according to A Vellayan, chairman of the Rs 24,350 crore Murugappa Group and president of the Indian Sugar Mills Association (ISMA).

Sugar mills, he noted, are already making payments to cane growers through banks. Most mills today have data on the quantity of cane supplied by each of their 15,000 to 20,000 farmers. This data is used by banks to credit cane payments directly to the accounts of individual farmers.

“Unlike in other crops, DBT is eminently feasible in the case of sugarcane where mills already have created systems for payment into the banks accounts of farmers. The government can use this to help cane farmers in view of our difficulties in paying even the Centre’s fair and remunerative price (FRP) this year”, Vellayan told presspersons here on Friday.

The cane FRP has been raised from Rs 170 per quintal in 2012-13 to Rs 220 for the current 2014-15 crushing season (October-September), whereas average ex-factory sugar prices during the same period have fallen from Rs 3,148 to Rs 2,700 per quintal.

“Since the start of this season in October, ex-mill prices of sugar have dropped from Rs 3,000-3,050/quintal to Rs 2,700-2,750/quintal in Uttar Pradesh, while declining from Rs 2,750-2,800 to Rs 2,450-2,500 in Maharashtra. We are struggling to pay even the Centre’s FRP, forget the higher State Advised Prices (SAP) declared by some state governments”, Vellayan said.

The Centre, he added, cannot keep raising the FRP even while sugar prices are falling. “The FRP should be fixed based on the Rangarajan committee formula of linking it to the sugar price. If the Centre wants to pay farmers anything above the formula-based FRP (70 per cent of sugar realisation, which will now work out to Rs 190/quintal), it should do so through DBT. The states should also follow the same route vis-à-vis the SAP”, he said. ISMA expects sugar production for 2014-15 at 260 lakh tonnes (lt), as against domestic consumption of 247-248 lt.