New Delhi : To provide further relief to the sugarcane farmers and to ensure clearance of their dues, the Government is going to bring out a comprehensive package of more than Rs.8000 crore, a sources said. A decision in this regard is expected to be taken in the meeting of the Cabinet Committee on Economic Affairs (CCEA) scheduled on Tuesday, the sources added.
This will include creation of buffer stock of 30 LMT for which the money will be transferred directly to the accounts of the sugarcane farmers. The creation of such a buffer stock will facilitate clearing of cane dues of the farmers and also ensure regular supply of sugar in the market by maintaining the demand and supply balance. The cost of creation of the buffer stock, including carrying costs and other incidental charges is estimated to be around Rs.1200 crore.
The package will also include a major scheme worth more than Rs.4,400 crore for increasing the ethanol capacity in the country which will help in diversion of sugarcane for production of ethanol in surplus season to facilitate timely payment of sugarcane dues to the farmers.
The Government is also understood to have decided a minimum price for sale of sugar at around Rs.29/kg. which will help clearance of sugarcane dues to the farmers. At the same time, a mechanism will be put in place to ensure that the retail prices of sugar are kept fully under control and sufficient supplies are maintained throughout the year.
Last month, the government had announced a Rs 1,500 crore production-linked subsidy for sugarcane farmers to help millers pay cane payments.
Sugar mills are unable to make payments to cane growers as their financial health has worsened due to a sharp fall in sugar prices after a record production of 31.6 million tonne (MT) so far in the 2017-18 season (October-September).
Maximum cane dues of more than Rs 12,000 crore are in Uttar Pradesh alone, the country’s biggest sugarcane producing state. According to sources, the government has worked out a slew of measures to ensure farmers’ dues are cleared by mills.
The food ministry has proposed creation of a buffer stock of 3 million tonnes of sugar. The carrying cost of the sweetener would be borne by the government which is estimated to cost the exchequer around Rs 1,300 crore, they said.
Besides setting up of the buffer stock, the food ministry has proposed fixing minimum ex-mill sale price at around Rs 30 per kg, reintroducing the monthly release mechanism and imposing stock limits on mills by fixing quota for each mill.
To help beleaguered sugar industry, the petroleum ministry has proposed interest subsidy of 6 per cent on Rs 4,500 crore to sugar mills for expansion and creation of new capacity of ethanol. The scheme provides five years time to mills for repayment of loans and a moratorium on repayment in the first year.
In order to improve the liquidity of the industry so that the cane price arrears of farmers can be cleared, the Government has implemented a series of interventions in the past four months.
These include increase in custom duty on import of sugar from 50% to 100%, removal of custom duty on export of sugar, imposition of reverse stock holding limits on sugar mills for the months of February and March 2018, allocation of mill-wise Minimum Indicative Export Quota (MIEQ) of 20 LMT and financial assistance @Rs.5.50/quintal of cane crushed amounting to about Rs.1500 crore.
The sugar season of 2017-18 witnessed highest ever sugar production of more than 315 LMT in the country. This increase in production is a result of higher cane yields and improved sugar recoveries aided by our Government’s pro-farmer policies. However, the depressed global price of sugar and the surplus domestic production has led to a decline in the market price of sugar leading to accumulation of cane arrears of more than Rs.20,000 crores.
The sugar industry is an important agro-based industry that impacts the livelihood of about 5 crore sugarcane farmers and around 5 lakh workers directly employed in sugar mills. Employment is also generated in various ancillary activities relating to transport, trade, servicing of machinery and supply of agriculture inputs. India is the second largest producer of sugar in the world after Brazil and is also the largest consumer. Today Indian sugar industry’s annual output is worth approximately Rs.80,000 crore.