NEW DELHI – The Indian Sugar Mills Association has written to the Prime Minister's Office as the delay in approval of the minimum selling price of sugar has become a concern for mills, an industry source said.
The delay in increasing sugar price is directly affecting mills' capacity to pay sugarcane dues to farmers, which has led to record high cane arrears at this time of the year, the source said.
As of Aug 31, sugar mills across the country owe nearly 145-bln-rupee arrears to cane farmers.
"The proposed increase in minimum selling price of sugar continues to be something that we all eagerly await. We have been requesting the PMO for a meeting with ISMA, but have not yet got the time," he said.
Discussions that the Centre is mulling an increase in sugar price had started back in June. Following which, a committee of secretaries gave a nod, and after that, a group of ministers headed by Home Minister Amit Shah also recommended the hike back in July.
After several deliberations, the food ministry floated a Cabinet note on hiking the minimum selling price of sugar by 2 rupees per kg to 33 rupees for 2020-21 (Oct-Sep). All of a sudden, the matter was dropped from Cabinet's agenda on Aug 18 as the Prime Minister's Office feared hoarding of sugar since there was still time for the new season to start.
While the hike in sugar price is likely to be 33 rupees per kg, the industry body, in several representations to the government has mentioned that the increase should be 34.5 rupees for sugar produced in the new season as the fair and remunerative price of cane has been fixed at 285 rupees per 100 kg at a recovery rate of 10%.
"…the proposed minimum selling price increase to 33 rupees per kg was when the FRP was 275 rupees per 100 kg at 10% recovery. ISMA has continuously been requesting the government at various levels for increasing the minimum selling price, which in turn, will reduce the mismatch between the FRP and the sugar price," the source said.
Apart from a hike in sugar price, the industry is also waiting for the announcement of various other policy decisions for the season starting Oct 1, which include fixing of ethanol price from various raw materials for supply to oil marketing companies for 2020-21 (Dec-Nov), sugar export subsidy plan and creation of buffer stock of 4 mln tn along with the subsidy.
"…the delay in minimum selling price increase is also delaying other three important policy decisions, which if further delayed, will cause immense harm to the sugar industry as well as to sugarcane farmers," he said.
The industry body has also requested the government to consider the all India average ex-mill price of sugar, which is around 33 rupees a kg currently, to calculate ethanol prices and subsidies under various other schemes.