Sugarcane farmers and millers have welcomed the Union Government’s decision to directly pay farmers a portion of the sugarcane price for 2017-18 to offset the mounting arrears by sugar mills.

Reacting to the Centre’s announcement to pay farmers ₹55 a tonne of cane for the October-September sugar season to be adjusted against the statutory Fair and Remunerative Price of ₹2,550 linked to 9.5 per cent sugar recovery, farmers representatives welcomed the move.

But there should not be any precondition to the support as was announced last time, said a representative.

RV Giri, National President, Consortium of Indian Farmers Associations, pointed out last year the Centre had announced a similar support but on the condition sugar mills meet a major portion of the ethanol supply requirement for auto fuel and the sugar export quota. This had excluded many from availing the benefit, he pointed out. This time around the government has said the support will be linked to conditions as decided by it. These should not result in anybody being left out, he said.

The Indian Sugar Mills Association said in a statement the relief will work out to about ₹1,550-1,600 crore for the current season. This is a welcome decision for the industry which is facing much higher losses.

(The Association had estimated the arrears at about ₹20,000 crore earlier this season due to a mismatch between sugarcane prices and sugar price).

This acknowledgement of the industry’s crisis can be taken as a first step in addressing the problem, it said.

Sugar mills, though were cautious on the possible conditions to be announced to be eligible for the benefit, welcomed the move in principle.

‘Sugar fund needed’

Palani G Periasamy, President, South Indian Sugar Mills Association – Tamil Nadu, felt this would be an opportune moment to launch a price stabilisation fund to support sugarcane price when sugar prices drop to unviable lows as has happened now. Sugar price at ₹28 a kg is well below cost of production.

N Ramanathan, Managing Director, Ponni Sugars (Erode) Ltd, said the sugar industry as a whole will be burdened with a shortfall of about ₹15,000 crore by the season end which could be partly addressed by various support measures. But with another surplus sugar year anticipated when sugar production will be in the vicinity of 30 million tonnes, such supplementary measures will not be adequate.

Decontrol cane, sugar

The government has to tackle the underlying mismatch between sugarcane price and sugar price. Ideally, it should decontrol both and allow a “normal economic cycle” take over. A stabilisation fund can be established to support farmers with a levy on consumers when sugar prices drop, he felt.

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