The Prime Minister Narendra Modi-led Cabinet on Wednesday approved a relief package of Rs 8,000 crore for the sugar industry, which would help cash-starved sugar mills to clear dues to cane farmers at the earliest. Of the total relief package, Rs 4,500 crore would be used for boosting ethanol production in the country. The package also includes government's last month's announcement of Rs 1,540-crore production-linked subsidy for sugarcane farmers to help millers pay cane payments.
The government has also increased minimum selling price (ex-mill sale price) to Rs 29 per kg from Rs 25 per kg. The centre would create a buffer stock of 3 million tonnes of the excess sugar, and has allotted Rs 1,175 crore for this purpose.
The government's decision to boost ethanol production, which can be blended in petrol, would help sugar mills clear their stock in time and provide cane farmers a remunerative price for their crops.
This could be a win-win situation for farmers, sugar mills and the government, which have been struggling due to high sugar production. The Cabinet also cleared Rs 1,300-crore interest subvention on loans to be provided for setting up new ethanol facilities and improving the infrastructure capacity of the existing ones.
Experts, however, suggest Rs 29 of floor price for sugarcane is not enough as its actual cost comes somewhere between Rs 33 and Rs 35. Sugar mill owners have appreciated the move but are skeptical over the logic behind providing Rs 29 per kg of minimum sale price, which they think would do little to help farmers under stress due to fall in the sugarcane price.
In an effort to keep domestic cane prices at check, the government had earlier doubled sugar import duty to 100 per cent, and had asked sugar mills to export 2 million tonnes of sugar.
Sugar mills are under a lot of pressure to clear farmers' dues worth over Rs 22,000 crore -- maximum Rs 12,000 crore worth dues in UP -- as the country saw a record sugar production of 31.6 million tonne in the 2017-18 season. The high production led to sharp drop in prices and farmers' money was stuck with sugar mills.
With PTI inputs