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In a bid to ease financial difficulties faced by sugarcane farmers on account of mounting arrears from sugar mills, the Union Cabinet on Economic Affairs on Wednesday gave its nod to Food Ministry’s proposal to provide a production subsidy of Rs 5.5 per quintal of the cane crushed during current sugar season.
The assistance would be paid directly to sugarcane farmers and this would be adjusted against their dues from sugar mills, said Union Minister for Law and Justice Ravi Shankar Prasad, who briefed the media after the Cabinet meeting.
The total outgo for this is estimated to be Rs 1540 crore, the Minister said.
Domestic sugar prices
Due to higher sugar production against the estimated consumption during the current sugar season 2017-18, the domestic sugar prices have remained depressed since the beginning of the season.
Due to depressed market sentiments and crash in sugar prices, the liquidity position of sugar mills has been adversely affected, leading to accumulation of cane price dues of farmers which have risen to more than Rs.19,000 crore, an official statement said.
A high level inter-ministerial meeting held on April 23 that suggested a host of measures, including giving production subsidy to farmers, to help the sugar industry. Two other measures – a sugar cess and reduction of GST on ethanol procured for sugar mills – are expected to be taken when the GST Council meets later this week.
Positive move
Terming it as a ‘positive move’, Abinash Verma, Director General of Indian Sugar Mills Association (ISMA), said It is important to note that the Government has accepted that the sugar industry and the farmers are in a problem”.
“This can be taken as a first step towards various other initiatives and financial assistance that the Government has to take very soon to further help the industry and the sugarcane farmers come out of the current crisis,” he said in a statement.
“Though the losses of sugar companies are much higher and this subsidy will reduce a small part of the losses that the sugar mills are incurring due to a massive fall in the ex-mill sugar price even when the Fair and Remunerative Price has been increased by 11 per cent in the current season.
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