Jan 29, 2019
In consequence of the tiff between the millers and the government, the sugarcane farmers are going to suffer, even as a big relief package for the distressed farmers in the country is set to be announced soon.
The sugar industry had been told categorically that no package for sugarcane sector can be expected now as the government in September last year provided a package worth Rs. 5,500 crore to support the sugar sector by way of offsetting cost of cane and facilitating export of sugar from the country.
While there is no proposal for any package from the Food Ministry, the PMO may take a different view of the issue considering the upcoming general elections, because Sugarcane is closely associated with the politics of Maharashtra and Uttar Pradesh.
In the last two months, the millers have made several demands to the government for assistance in terms of bridge loan and increase in Minimum Selling Price (MSP) to improve cash liquidity to enable them to release cane payments.
Last month, NCP chief and de facto sugar leader in Maharashtra Sharad Pawar wrote to Prime Minister Narendra Modi seeking the government’s intervention for the release of collateral sugar held with the public sector banks (PSBs) to boost exports which were stuck due to the difference in subsidy payment.
But officials in the Food Ministry are questioning why the millers failed to export seven million tonnes under Minimum Indicative Export Quota (MIEQ) with the government compensating the expenses towards internal transport, freight, handling and other charges.
The industry bodies, Indian Sugar Mills Association (ISMA) and National Federation of Cooperative Sugar Factories (NFCSF), have claimed that the ex-mill price of sugar is over Rs. 34 per kg but the Minimum Selling Price Price (MSP) is Rs. 29 per kg. They want the MSP to be increased to Rs. 34 per kg.
The drop in the crude oil prices had led to the reduction in the demand of ethanol, which had forced the industry in Brazil to shift focus back on the sugar production. It had led sugar prices in the global market to fall to 12 cents per pound, making it difficult for the domestic millers to compete in the global market, he said.
In order to help millers clear farmers’ dues, the government has also decided to provide financial assistance to sugar mills at the rate of Rs 13.88 per quintal of cane crushed in sugar season 2018-19 to offset the cost of cane. However, the millers found it “inadequate”.