Paswan to meet cane growers, CMs next week

With the sugar industry struggling to pay cane arrears to farmers, Food Minister Ram Vilas Paswan has convened two separate meetings next week with the farmers and Chief Ministers of sugar producing states to help resolve the crisis.

Cane price arrears of farmers have been gradually increasing over the past few years, touching record level of Rs 19,250 crore at the end of March 2015. The dues stood at Rs 8,577 crore in 2011-12, Rs 12,702 in 2012-2013 and Rs 13,124 in 2013-14.

“Due to fall in domestic as well as global sugar prices, mills have been unable to recover their cost of production for the last 3-4 sugar seasons. On the other hand, sugarcane prices are going up every year, which the mills are not able to pay. There is a mismatch in cost of production and sale price of the sweetener,” explained Abinash Verma, Director-General at Indian Sugar Mills Association (ISMA).

The industry body met the Food Minister earlier this month to discuss issues impacting the sugar industry. Mr Verma said, “The Minister understood the subject... he plans to meet CMs and also the farmers next week to sort out the crisis.”

A meeting with cane growers will be held first on April 15, followed by a meeting with Chief Ministers on April 16.

To improve the situation, ISMA has requested that the government makes bulk purchase of 25 lakh tonne of sugar, which is likely to give Rs 7,200 crore of cash flow to the sugar mills.

“This can be used to pay cane farmers as well. By removing surplus stocks from the mills, market sentiments will also improve, helping in partially improving the depressed ex-mill sugar prices,” Mr Verma added.

This year the sugar production in the country was forecast to be 265 lakh tonne. However, it is now expected to be around 270 lakh tonne against an estimated consumption of 248 lakh tonne.

The ISMA has also sought from the government exports subsidy on white sweetener, besides subsidy on ethanol production and procurement, and restructuring of debt of sugar mills.

“The debt burden of the sugar mills has increased by more than 3 times in the last 5 years. As compared to around Rs 11,443 crore at the end of 2007-08 , debt burden at end of 2012-13FY was Rs. 36,601 crore,” Mr. Verma said.