Union Food Minister Piyush Goyal on Friday said the government cannot reduce the minimum price at which sugar mills have to purchase sugarcane from farmers and urged the industry to expand product portfolio as well as remain profitable rather than depend on central subsidies. Sugarcane is bought by sugar mills at a Fair and Remunerative Price (FRP), which is also the minimum selling price fixed by the central government. Addressing the 86th annual general meeting (AGM) of industry body ISMA, Goyal was not in favour of the industry's demand to hike the MSP of the sweetener from the current level of Rs 31 per kg, as it would lead to rise in retail prices. Also Read - Sitharaman promises 'never before' like Union Budget Goyal, who is also the railway and commerce minister, said the government's recent decision to provide Rs 3,500 crore subsidy for exports of 60 lakh tonnes of sugar in the current marketing year 2020-21 (October-September) will help in liquidating surplus sugar stock. On the industry's demand that the sugarcane purchase price be linked with sugar price realisation, he said it is not practical to reduce the FRP and told the industry leaders to produce more ethanol as well as other bye-products to boost their income. "You are trying to suggest a formula of 70 per cent revenue sharing and things like that. Let's be practical about it. Why do we beat around the bush. You also know, I also know we cannot reduce the farmer's FRP. It's now an institutionalised mechanism and that's been going on for several years probably even before this government came into the centre."And my own sense is, we will have to start from the presumption that that's a reality and from there, we will have to look at ways and means. After all, why are we promoting ethanol in such a big way. We recognise that we are not going to be able to reduce the FRP," Goyal said. The minister was responding to ISMA President Vivek Pittie's demand to frame sugarcane pricing policy and accept Rangarajan Committee recommendation to determine the cane price payable by sugar mills at 70 per cent of revenue from sugar and by-products or at 75 per cent of revenue from sugar alone. Referring to the industry's demand to hike minimum selling price to help millers, Goyal said he was "not very happy with the idea of keeping on increasing the consumer's
The minister said the file regarding this was put up before him but "my immediate reaction was that we are only going to institutionalise price increase based on this formula". While emphasising that the industry should look at alternate ways to enhance revenue, Goyal said, "Why should ethanol be only 10 per cent. We can look at 20 per cent, we can look at 30 per cent blending. I am told some vehicles in Brazil have as high as 90 per cent blending of ethanol". Expressing concern about some mills being profitable and others in bad shape, he asked the Indian Sugar Mills Association (ISMA) to undertake gap study to make mills efficient and competitive.
Goyal asked the food secretary to do a most holistic assessment along with ISMA as well as the cooperative sector and find a sustainable solution which is workable that may keep the industry also profitable and economically viable but "with least stress on an annual basis to the government." "If you are going to be all the time dependent on government subsidies, then we rather give that subsidy to the farmer to look at alternate produce and bring down the sugar production keeping an adequate buffer stock or adequate stock for years of exigency... If you remain dependent on clutches of government's support and subsidies, you will never be able to become more sufficient," he noted. Goyal said a long term solution should be found that can support the farmers as well as make factories financially and economically viable.