The Hindu Business Line : ISMA urges Govt to foot cane subsidy bill

Mr Vivek M. Pittie, President, Indian Sugar Mills Association, with the Vice President, Ms Rajshree Pathy, at a press conference in the Capital on Monday. -- Kamal Narang

New Delhi , Jan. 12

THE Indian Sugar Mills Association (ISMA) has urged the Centre to provide a direct grant of Rs 7.50 per quintal to sugarcane growers for the cane supplied by them to factories during the current 2003-04 crushing season (October-September).

"The mills are in no position to pay the basic statutory minimum price (SMP) of Rs 73 per quintal declared by the Centre (linked to a base sugar recovery of 8.5 per cent recovery), which is way above the Rs 65.50 per quintal price that was initially recommended by the Commission for Agricultural Costs and Prices (CACP) for the current season," said Mr Vivek M. Pittie, ISMA President.

"Given our inability to pay, we would like the Centre to foot the difference of Rs 7.50 per quintal as a direct subsidy that could be routed through the mills to the growers."

He told newspersons that ISMA had already made a representation to this effect to the Prime Minister, Mr Atal Bihari Vajpayee, after the new SMP was declared by the Government on December 30.

The new SMP and factory-wise cane prices payable are yet to be officially notified. Under Clause 3 (3) of the Sugarcane (Control) Order, 1966 mills are required to pay the officially notified SMP to growers "within 14 days from the date of delivery of the sugarcane".

Mr Pittie said that with ex-factory realisations on domestically sold sugar currently in the region of Rs 11.70-12 per kg and realisations from exports being only Rs 8.50-8.60 per kg, it was "impossible" for the mills to pay the new SMP.

As per the Sugar Directorate's data, the current season has begun with record unpaid cane arrears of over Rs 1,780 crore, with mills unable to pay even last season's SMP of Rs 69.50 per quintal.

The arrears figure would be higher if one considers that the amount payable by Maharashtra mills (Rs 2,479 crore) has been computed on an `advance price' of Rs 56 and not the average SMP of Rs 98.30 per quintal payable for the State.

If the latter price is taken, the actual payable amount on total cane quantity crushed of 531.69 lakh tonnes would have been over Rs 4,800 crore, taking the all-India outstanding arrears figure to Rs 4,102 crore.

"Under today's circumstances, the only way to pay the Rs 73.50 per quintal SMP is for the Government itself to bear the additional liability, which will cost the Exchequer about Rs 1,800 crore," said Mr Pittie.

"There is nothing abnormal is this. In Thailand, for instance, last year the millers could pay only 460 baht per tonne as per an established commercial sugar prices-linked formula, with the Government pitching in with 120 baht, thereby guaranteeing a price of 580 baht per tonne for the growers."

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