Govt rules out reducing sugarcane price

Union Food Minister Piyush Goyal on Friday said the government cannot reduce the minimum price at which sugar mills have to purchase sugarcane from farmers and urged the industry to expand product portfolio as well as remain profitable rather than depend on central subsidies.

Sugarcane is bought by sugar mills at a Fair and Remunerative Price (FRP), which is also the minimum selling price fixed by the central government.

Addressing the 86th annual general meeting (AGM) of industry body ISMA, Goyal was not in favour of the industry’s demand to hike the FRP of the sweetener from the current level of Rs 31 per kg, as it would lead to rise in retail prices.

Goyal, who is also the railway and commerce minister, said the government’s recent decision to provide Rs 3,500 crore subsidy for exports of 60 lakh tonnes of sugar in the current marketing year 2020-21 (October-September) will help in liquidating surplus sugar stock.

On the industry’s demand that the sugarcane purchase price be linked with sugar price realisation, he said it is not practical to reduce the FRP and told the industry leaders to produce more ethanol as well as other bye-products to boost their income.

The minister was responding to ISMA President Vivek Pittie’s demand to frame sugarcane pricing policy and accept Rangarajan Committee recommendation to determine the cane price payable by sugar mills at 70 per cent of revenue from sugar and by-products or at 75 per cent of revenue from sugar alone.

Referring to the industry’s demand to hike minimum selling price to help millers, Goyal said he was “not very happy with the idea of keeping on increasing the consumer’s price also“.

While emphasising that the industry should look at alternate ways to enhance revenue, Goyal said, “Why should ethanol be only 10 per cent. We can look at 20 per cent, we can look at 30 per cent blending. I am told some vehicles in Brazil have as high as 90 per cent blending of ethanol“.

Expressing concern about some mills being profitable and others in bad shape, he asked the Indian Sugar Mills Association (ISMA) to undertake gap study to make mills efficient and competitive.

Goyal said a long term solution should be found that can support the farmers as well as make factories financially and economically viable.

The minister also said there cannot be a situation where production of sugarcane as well as sugar keep expanding but at the same time, sugar mills complain that they are in trouble and expect subsidies from the government.

Talking about the government’s decision to give a subsidy of Rs 3,500 crore to sugar mills for the export of 60 lakh tonnes of the sweetener during the ongoing marketing year 2020-21, the minister said this will “give some comfort to industry in disposing surplus sugar stocks“.

According to him, the sugar output is expected to rise 20 per cent in the current marketing year.

Goyal said the food ministry will also soon clear the subsidy worth Rs 5,361 crore of previous marketing year to mills, pertaining to exports and ethanol programme.

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