“Linkages between MSP of sugar and FRP of sugarcane is the only way to financial stability of the sugar sector in the coming days” – Mr.Manohar Joshi – M.D Jawahar SSK

In a scenario where sugar production in India has taken tall heights, this has resulted in a mismatch between prices. The estimated inventory as on October 1, 2019 is taking shape at 147 LMT where Minimum Selling Price stands at Rs.3100/qntl in spite of the cost of production in India being Rs.3600/qntl and global being Rs.1900/qntl. The industry is also strapped with cane arrears of Rs.18000 crores whereas the stock value is estimated to be Rs.45600 crores amongst which the stock value of sugar in Maharashtra state accounts to Rs.21700 crores.

Speaking at the Sugar Conference 2020 on Saturday, Mr. Manohar Joshi and Managing Director of Jawahar SSK gave insights on the financial status of 25 cooperative sugar mills in Maharashtra state in the F.Y 2017-18.

Financial status of top 25 co-operative sugar mills in Maharashtra State for F.Y. 2017-18
Expenditure % With value addition
1. Cost of cane (ex-gate) 79.49 70.55
2. Conversion of cost 14.2 14.2
3. Cost of Interest & Depreciation 6.31 15.25
                         TOTAL 100 100
Income
1. Sugar 93 80.85
2. By products
Bagasse @ Rs.1600 per ton 1.6 8.25
Molasses @ Rs.500 per ton 5 10.5
Pressmud @ Rs.400 per ton 0.4 0.4
                         TOTAL 100 100

Source:VSI Report

He added that the sugar production nationwide is increasing, exports have been diminishing and sugar mills are getting financially sick day by day.

There is a dire need for remedies that would bring financial stability to the sugar sector in the coming days:

  • MSP of sugar should be linked to the FRP of sugarcane.
  • The present MSP of Rs.3100/qntl should be hike sugar MSP to Rs.3600/qntl.
  • Long term policy of at least 10 years for value added products i.e. co-generation and ethanol and revision if any should be upward.
  •  MIEQ of 70 LMT with required production subsidies to be continued for 2019-20 season immediately before the crushing season commences.
  • Buffer stock of 50 LMT should be maintained for season 2019-20.
  • Necessary amendments should be made in the Essential Commodities Act regarding payment period of FRP in installments and relaxation on interest made on late payments from 15% to 9%.

Speaking specifically about Maharashtra state, Mr. Joshi shared his suggestions on the State Government Subsidies that, as per GR dated 30 July 2015, State Government had declared interest subsidy at 10% for 4 more years for soft loan 2015. The amount of interest subsidy is not fully paid off for 2017-18. In addition to this an amount of 2018-19 is also due. Along with that the interest subsidy for 4 more years for soft loan 2019 on the basis of soft loan 2015 should be granted.Throwing light on Central Government subsidies the remedies suggested were buffer stock subsidy for remaining 3 quarters, subsidy of Rs.138.80/MT and Export Sugar Transport Subsidy should be released immediately. The MSC Bank period of soft loan 2019 should be extended up to 5 years.

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