Cabinet approves financial assistance to sugar mills for clearing cane dues of farmers

NEW DELHI: The Cabinet Committee on Economic Affairs, chaired by the Prime Minister  of India Narendra Modi has given its approval to provide financial assistance @ of Rs. 5.50 per quintal of cane crushed in sugar season 2017-18 to sugar mills to offset the cost of cane, in order to help sugar mills to clear cane dues of farmers.nnTotal dues to cane growers is likely to have crossed Rs 20,000 crore by now, industry lobby Indian Sugar Mills Association (ISMA) had said.nnDetails:nnThe assistance shall be paid directly to the farmers on behalf of the mills.nIt will be adjusted against the cane price payable due to the farmers against Fair and Remunerative Price (FRP) including arrears relating to previous years.nSubsequent balance if any, shall be credited into the mill?s account.nAssistance shall be provided to those mills which will fulfil the eligibility conditions as decided by the Government.nnDue to higher sugar production against the estimated consumption during the current sugar season 2017-18, the domestic sugar prices have remained depressed since the commencement of the season. Due to depressed market sentiments and crash in sugar prices, the liquidity position of sugar mills has been adversely affected, leading to accumulation of cane price dues of farmers which have reached to more than Rs.19,000 crore.nnIn order to stabilize sugar prices at reasonable level and to improve liquidity position of mills thereby enabling them to clear cane price dues of farmers, Government has taken following steps in past three months:nnIncreased customs duty on import of sugar from 50% to 100% in the interest of farmers.nnImposed reverse stock holding limits on producers of sugar for the months of February and March, 2018.nnGovernment has also fully withdrawn the customs duty on export of sugar to encourage sugar industry to start exploring possibility of export of sugar.nnIn view of the inventory levels with the sugar industry and to facilitate achievement of financial liquidity, mill-wise Minimum Indicative Export Quotas (MIEQ) have been fixed for sugar season 2017-18. Export Quotas of 20 Lakh tonnes of all grades of sugar; viz. raw, plantation white as well as refined, have been prorated amongst sugar factories by taking into account their average production of sugar achieved by the sugar mills during last two operational sugar seasons and the current season (up to February,2018).nnFurther, to facilitate and incentivize export of surplus sugar by sugar mills, Government has allowed Duty Free Import Authorization (DFIA) Scheme in respect of sugar.nnAccording to the food ministry, till 12 April, mills across different states owed farmers Rs18,044 crore. While mills in Uttar Pradesh owed farmers Rs 8,869 crores, the dues were Rs 2,420 crore in Karnataka and Rs 2,213 crore in Maharashtra.nnPayment to cane growers is considered ?due? when it is delayed by more than 14 days after supplying raw cane to a mill. Piling up dues to farmers is likely to impact farm incomes which has been hit by falling prices of pulses, oilseeds and vegetables over the past year.nnAccording to ISMA, mills have so far produced close to 29.98 million tonnes of sugar in the 2017-18 crushing season (October 2017 to September 2018), a record production, surpassing the previous high of 28.4 million tonnes produced in 2006-17 and 28.3 million tonnes in 2013-14.nn?Since 227 sugar mills are still crushing sugarcane, there will be a further addition to the stocks which will only increase the surplus sugar availability over and above the domestic requirement,? ISMA had aid in a statement.nnIndia?s domestic production already exceeds consumption by a staggering 5 million tonnes. According to ISMA, in the past five months, wholesale sugar prices have fallen by about Rs 9 per kg, and mills are incurring a loss of Rs 8 per kg of sugar sold.