Indian sugar mills association

Cabinet okays Rs 4.5 per quintal subsidy for sugar cane growers

Date:	19 Nov 2015

Source:	The Millennium Post

Reporter:	MP Correspondent

News ID:	4946

Pdf:
Nlink:

In a major decision aimed at giving some relief to sugarcane growers in the country, the Prime Minister Narendra Modi-led Cabinet Committee on Economic Affairs on Wednesday decided to pay a production-linked subsidy of Rs 4.50 per quintal directly to cane farmers in the 2015-16 season. According to experts, the move of Modi government is aimed at helping cash-starved sugar mills clear arrears, which would cost the exchequer about Rs 1,147 crore.

Sugar mills are facing a liquidity crunch due to low prices of the sweetener in retail markets. The millers owe about Rs 6,500 crore to cane farmers. “In order to further reduce arrears and support cane growers, the government has taken out a WTO-compliant scheme. Production subsidy will be given to offset the cost of cane and facilitate the timely payment of cane prices to farmers,” Power and Coal Minister Piyush Goyal told mediapersons after the CCEA meeting.

“The proposal will entail giving production subsidy directly to cane growers at Rs 4.50 per quintal of cane crushed for the production of sugar,” Goyal further said, adding that eventually, this will help liquidate some of the sugar stocks and meet the export target at least to the extent of 80 per cent.

The power minister in the Modi Cabinet said that the production subsidy “will entail a benefit of about Rs 1,147 crore directly to cane farmers”. The Food Ministry had proposed a production subsidy of Rs 4.75 per quintal out of the cane FRP (fair and remunerative price) of Rs 230 per quintal for the 2015-16 season (October-September).

The ministry had proposed payment of production subsidy from the Sugar Development Fund (SDF) directly to dedicated bank accounts of farmers. At present, sugar mills have to pay the entire cane price, called FRP, fixed by the Centre. FRP is the minimum price that sugar mills have to pay to cane farmers. Sugar export subsidy was given to millers in the last two seasons to help them clear cane dues to farmers, but the same has been discontinued this time due to WTO objections.

The country is estimated to produce for the sixth straight year surplus sugar at 26-27 million tonnes this season.

Industry body ISMA hails Govt move

The sugar industry welcomes Government’s decision to give Rs. 4.50 per quintal of sugarcane crushed in 2015-16 SS. As per estimated cane crushing during 2015-16 sugar season, it will work out to around Rs. 1100 crore. This decision is significant as it means that the Government is no longer shying away from owning up the FRP it fixes for sugarcane, by directly contributing for a part of the cane price, instead of continuously burdening the millers. It will reduce industry’s liabilities towards cane to that extent, reducing a part of its losses. This concept of the Government to bridge the gap, at least partially, between what the sugar mills cane pay to farmers as per their revenue realization, and what the Government wants to give to farmers, will help to reduce cane price arrears. However, at current low sugar prices, the losses will be more than Rs. 1100 crore and, therefore, if sugar prices do not improve to cover costs during the season, the industry and farmers may seek further help from the Government’s budget.

News

Navigation