With sugar mills facing a liquidity crisis, the government has decided to fix the minimum price of refined sugar at ₹29/kg, create a buffer stock, and facilitate a ₹4,440 crore loan scheme to help mills produce ethanol from surplus cane.
These decisions were taken by the Cabinet Committee on Economic Affairs on Wednesday, said an official statement. Mill owners welcomed the measures.
Package won’t help, say farmers
The Central government’s package to sugar mills comes days after the BJP lost a crucial bypoll in Kairana, in the heart of Uttar Pradesh’s cane belt. It aims to help sugar mills start paying off their pending dues to cane farmers. Arrears have now crossed ₹22,000 crore on the back of record sugar production and a resultant crash in prices this season.
The government expects to spend ₹1,175 crore on the creation of a buffer stock of 30 lakh tonnes for one year, subject to review based on the market price and availability of the commodity. The reimbursement will be paid directly into farmers’ bank accounts every quarter, on behalf of mills against their pending dues, said the statement.
The government intends to control sugar prices by notifying an order under the Essential Commodities Act, 1955 and imposing stockholding limits on mills. Ethanol production capacity will be enhanced by facilitating a ₹4,440 crore bank loan, with the government bearing an interest subvention of ₹1,332 crore over a period of five years.
Disgruntled by the fact they are yet to get any money from a previous ₹1,500 crore subsidy announced by the government,farmers expressed scepticism about benefiting from the new package. “This will not go to the farmers. It will only go to the mill owners...this is a lying government,” said Harpal Singh, a farmer.
Mill owners welcomed the measures, but also expressed doubts about the long-term impact of the government’s package. Indian Sugar Mills Association director general Abinash Verma pointed out that the proposed ₹29 per kg minimum price for sugar would not cover the cost of sugarcane, which is also set by the government; sugar prices would have to rise to ₹35 per kg to be sufficient.
“It will, therefore, be a challenge to expect the sugar industry to clear the huge cane price arrears on this basis,” he said, adding that the buffer stock would also have only a short-term impact. “What is of concern is that there is no idea or proposal on rationalisation of cane pricing policy, which is actually the main reason for all the problems of the industry today.”
