Arrears mount, all eyes on bailout for sugar sector

Sugar production in the country has touched an all-time high of 30 million tonnes. (DH file photo)
Highlights: 
Sugar production in the country has touched an all-time high of 30 million tonnes
According to government data, sugar mills owe cane growers Rs 18,044 crore in arrears

As arrears mount, the Centre is on the lookout for a fresh bailout package for the sugar industry which is grappling with excess stocks and depressed prices of the sweetener.

“The mandatory export scheme has not had the desired impact,” a senior government official said, adding that the Centre would now explore avenues to provide relief to the sector.

However, the official ruled out any possibility of offering subsidies to the sector. According to the Minimum Indicative Export Quota scheme, the mills have an obligation to export 7.5% output of its production capacity.

Sugar production in the country has touched an all-time high of 30 million tonnes, which is five million tonnes more than the annual domestic consumption leading to a dip in prices of the sweetener.

According to government data, the sugar mills owe cane growers Rs 18,044 crore in arrears, the highest in recent years.

“Sugar mills in Uttar Pradesh owe Rs 8,869 crore to cane growers, while arrears in Karnataka is Rs 2,420 crore and in Maharashtra, it is Rs 2,213 crore,” the official said.

The Indian Sugar Mills Association (ISMA) has demanded a production-linked incentive to cane farmers as it was done in the 2015-16 marketing year.

On account of the bumper production, ISMA said sugar prices have been under severe pressure in the last 4-5 months and have fallen by Rs 9 per kg across the country.

As compared to the cost of production, the current ex-mill sugar prices are around Rs 8 per kg lower and the sugar mills were incurring substantial losses.

Crushing operations are almost over in Karnataka and only one sugar mill was operational as on April 15, 2018. The state has so far produced 3.63 million tonnes of sugar.

To clear outstanding payment, the association demanded that the government should bailout mills and farmers as it did in 2015-16.

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