Govt. approves sugarcane subsidy of Rs. 5.5 per quintal

The government has approved a subsidy of Rs. 5.5 per quintal of sugarcane crushed in the 2017-18 season to help sugar mills clear more than Rs. 19,000 crore in dues to cane farmers.

The decision was taken by the Cabinet Committee on Economic Affairs on Wednesday, an official statement said. The assistance will be paid directly to the farmers on behalf of the mills. It will be adjusted against the Fair and Remunerative Price (FRP) of Rs. 255 per quintal set by government as the rate that mills must pay to cane farmers, as well as the arrears of payments pending from previous years.

Any subsequent balance will be credited into the mill’s account, the statement said, adding that assistance will be provided to those mills which fulfil the government’s eligibility conditions.

The subsidy will work out to Rs. 1,550 to Rs. 1,600 crore for the current season, said Abinash Verma, director general of industry body Indian Sugar Mills Association (ISMA). He welcomed the decision, but added that “this can be taken as a first step towards various other initiatives and financial assistance that the Government has to take very soon” to help the mills and the farmers.

Sugar production has hit record highs this year, crossing domestic consumption prices, and leading to a crash in prices. Industry lobbyist Indian Sugar Mills Association (ISMA) estimates that wholesale sugar prices have fallen by Rs. 9 per kg over the past five months, and the mills are now incurring a loss of Rs. 8 per kg of sugar.