Cabinet nod for bailout package for sugar sector

The Modi government on Wednesday fixed Rs 29 a kg as the mill gate price of sugar as part of a bailout package for the ailing sector, a move that has not gone down well with the industry.

The bailout package, approved by the Union Cabinet chaired by Prime Minister Narendra Modi, involves building a 30 lakh tonne buffer stock of sugar to absorb excess supply from the market, and grant soft loans to the tune of Rs 4,500 crore to help millers expand ethanol production capacity.

The buffer stock is expected to cost the government Rs 1,175 crore, while interest payment on soft loans will set back the national exchequer by Rs 1,332 crore. This is in addition to the Rs 1,540 crore “production assistance” announced by the Centre to cane growers last month.

“The government is concerned about farmers' welfare and is helping mills cut losses to enable them to clear dues to farmers,” Food Minister Ramvilas Paswan told reporters here.

The Indian Sugar Mills Association (ISMA) and the National Federation of Cooperative Sugar Factories (NFCSF) termed the ex-mill price of Rs 29/kg announced by the government as “inadequate” and “unsatisfactory”, contending that the average production cost of the sweetener works out to Rs 35/kg.

Mixed reaction

“It will, therefore, be a challenge to expect the sugar industry to clear the huge cane price arrears,” ISMA Director General Abinash Verma said in a statement.

NFCSF President Dilip Walse Patil said the bailout package for the sugar industry was meagre as compared to Rs 22,000 crore outstanding cane dues of sugarcane farmers.

All India Sugar Trade Association (AISTA) hailed the government's decision to create 3 million tonnes buffer stock of sugar, soft loans of about Rs 4,500 crore for boosting ethanol capacity and fixing of minimum selling price of sugar at Rs 29 per kg.