Ahead of a meeting with the Chief Ministers of sugarcane-growing States, the Centre gave an indication on Wednesday that it was willing to raise import duty on sugar to check a fall in domestic prices and help the industry clear cane arrears running into Rs. 19,377.25 crore.

Import duty on raw and refined sugar was raised last August to 25 per cent to bail out the cash-strapped industry. Now the proposal is to further raise the duty to 40 per cent. Sugar mills are unable to clear cane arrears as the ex-factory cost of the sweetener is ruling below the production cost.

Union Food Minister Ram Vilas Paswan met leaders of farmers’ organisations here to examine solutions to enable the sugar industry to clear cane arrears. The maximum dues are in mills operating in Uttar Pradesh.

The demands raised by the farmers’ groups included going back to the quarterly release mechanism quota for mills, creation of buffer stocks on government account and using up of the Sugar Development Fund to make direct payments to farmers. In fact, most farmers wanted the government to make direct payment to growers.

“The problems of farmers are complex. The Ministry will write to the Finance Ministry to raise the import duty to 40 per cent,’’ Mr. Paswan told journalists after the two-hour meeting attended by representatives from 14 States. The meeting was attended among others by Union Ministers Nitin Gadkari and Sanjeev Baliyan.

During the discussions farmers of some States, especially U.P., wanted the government to revert to the earlier quarterly release quota mechanism for open market sale of sugar by factories. This mechanism was done away with after decontrol of the industry.

Buffer stock

The farm leaders also asked the government to create a buffer stock of 30 lakh tonnes of surplus sugar on government account. This is a demand they share with the industry.

Farmers from Maharashtra wanted the 10 per cent limit on generation of ethanol from molasses to be scrapped as they saw higher profit from sale of ethanol than sugar.

The Indian Sugar Mills Association has been asking for export subsidy, creation of buffer stock and restructuring of loan.