NEW DELHI – The sugar industry today asked the government to continue with the export subsidies for sugar mills in 2019-20 (Oct-Sep) in view of the likely surplus in the next season, but minus the riders such as mill-wise export quotas. It also sought increasing the buffer stock of sugar to 5 mln tn from 3 mln tn and increasing the minimum sale price of the sweetener to 35-36 rupees per kg to help them make timely payments to cane farmers, sources said.
Officials from the food ministry met representatives from the sugar industry today to gauge policy intervention that might be needed to bail out sugar mills next season, as supplies are expected to be at record high in 2019-20, despite a likely drop in production.
For the next season, the industry has pegged sugar output at 28-30 mln tn, lower than this year's record of 33 mln tn. Despite the likely drop in output, sugar surplus in the country is seen at a record high of about 16.5-18.5 mln tn, which could weigh on prices and make it tougher for mills to pay cane arrears.
Even in the current sugar season that ends September, the government took a series of measures to bail out the sugar industry that was inundated with supplies due to higher output. The government made export of 5 mln tn sugar mandatory, announced subsidies for mills that export sugar, introduced a minimum price for sugar sale, brought back monthly sale quotas and forced oil marketing companies to buy ethanol from mills at higher prices.
The sugar industry wants most of these sops to continue in the next season to ensure export of at least 7 mln tn, but on easier terms, said an industry official who was present at the meeting.
The industry today asked the government to scrap mill-wise quotas on export of sugar to ensure higher exports next season, as about a third of the mills did not export sugar this season. The government gives subsidy to mills only after they match the entire export quota for the year, which leads to delays in payments and also deters small mills from exporting, the official said.
The industry also sought a hike in minimum sale price of sugar to 35-36 rupees per kg from the current 31 rupees. "Current MSP needs to be revised upward by computing all the actual costs on finance and depreciation so as to bring it close to, if not more than, the average cost of production," another official, who was part of the deliberations, said.
The industry has asked the government to re-align the sale price with a spread of 200 rupees per 100 kg between medium-grade and small-grade sugar to ensure parity between the selling price of the two grades, the official said.
The industry sought rationalisation of cane pricing policy, and adoption of the Rangarajan Committee report that recommended a revenue-sharing formula for deciding cane prices. Mills also sought creation of Cane Farmers Welfare Fund that could be used to bridge the gap between fair and remunerative price announced by the government and cane price that mills can realistically pay, to ensure there are no cane arrears.
On the ethanol front, industry asked for a long-term pricing policy, and a target of increasing ethanol blending in petrol to 20% from the current level of 7.5%.
The industry also proposed a dual pricing policy for sugar that enables them to sell the sweetener to industrial users at 60 rupees a kg and to household consumers at 35 rupees a kg to help mills get better realisations.