Image Credits: Moneycontrol
The Union Government on May 9, 2018 issued orders for extending assistance to clear the dues of sugarcane farmers.
An official statement by the Ministry of Consumer Affairs, Food and Public Distribution Ministry read that the government has decided 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 the cane.
Why?
Due to higher sugar production against the estimated consumption during the current sugar season 2017-18, the domestic sugar prices had remained depressed since the commencement of the season.
As a result, accumulated dues of farmers had reached to over Rs 20,000 crores.
Key Highlights
• The approval for providing the monetary assistance was given by Cabinet Committee on Economic Affairs earlier this month.
• The assistance shall be paid directly to the farmers on behalf of the mills and be adjusted against the cane price payable due to the farmers against Fair and Remunerative Price (FRP) including arrears relating to previous years.
• It will be provided on the basis of actual cane crushed or inter se allocation of earlier estimated 2800 LMT of cane to be crushed during 2017-18 sugar season, whichever is lower.
• The total assistance would amount to about Rs 1540 crore, which will directly benefit a large number of farmers and will help the sugar mills in the long run in discharging their liabilities on account of cane price dues of farmers.
• The mills that fulfill the following conditions will be eligible for the financial assistance of Rs 5.50 per quintal of cane crushed :
– Mills having ethanol production capacity and who have signed contracts with Oil Marketing Companies (OMCs) for the supply of ethanol, should have supplied at least 80% of the indented quantity of ethanol under Ethanol Blended with Petrol Programme (EBP) to OMCs during 2017-18 ethanol season (December, 2017 – November, 2018).
– The mills that have filed updated online return in Proforma-II relating to data on crushing of cane, production of sugar, the sale of sugar and by-products, etc as prescribed by Government under the provisions of Sugar (Control) Order, 1966.
– The mills should have fully complied with all the orders/directives of Department of Food and Public Distribution (DFPD) to the sugar mills during 2017-18 sugar season.
Steps taken by Government to stabilise sugar prices
The Government has taken the following steps in the past three months to stabilize sugar prices at a reasonable level and improve the liquidity position of the mills thereby enabling them to clear cane price dues of farmers:
• Increased customs duty on import of sugar from 50% to 100%.
• Imposed reverse stock holding limits on producers of sugar for the months of February and March 2018 to stabilise sugar price.
• Withdrawn the customs duty on export of sugar to encourage sugar industry to start exploring the possibility of export of sugar.
• In view of the inventory levels with the sugar industry and to facilitate achievement of financial liquidity, mill-wise Minimum Indicative Export Quotas (MIEQ) totaling 20 Lakh MT have been fixed for sugar season 2017-18.
• Further, to facilitate and incentivize export of surplus sugar by sugar mills, the government has allowed Duty-Free Import Authorization (DFIA) scheme in respect of sugar.
Background
In April 2015, the cane price arrears of farmers reached an alarming level of about Rs 22,000 crores.
In December 2015, the Union government notified a production subsidy scheme to offset the cost of cane to clear the dues of sugarcane farmers.
The subsidy was provided at Rs. 4.50 per quintal of cane crushed. As a result of this, the sugar prices stabilized and arrears were reduced substantially.
