 "Food minister favours hiking import duty on sugar to 40%")
He was speaking to reporters after chairing a meeting of prominent farmer leaders and their representatives on the crisis in the sugar sector.
Officials said a prominent and dominant view in the meeting was to bring back the old system of regulated release of sugar in the market to prevent free-fall in prices. The release order mechanism under which the Centre determined the quantum of sugar that a mill could sell in the open market was discontinued few years back, following deregulation of the sector.
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"Our idea is to solve the problems of sugarcane farmers and also at the same time, solve the issues related to the sugar industry," Paswan said.
In August last year, import duty on both raw and refined sugar was raised to 25 per cent from 15 per cent to bail out the cash-starved sugar industry. However, without the increase there has been negligible import of sugar. The leaders presented a set of five major demands to the minister, which would be shared with a group of chief ministers and also ministers of the government in a meeting scheduled for on Thursday.
"Problems of cane farmers are complex. There were 14 farmers organisations present in the meeting. They made five key demands, including complete ban on sugar import or hike in import duty and creation of buffer stock of 3 million tonnes,\" Paswan said.
The other demand put forth by the leaders include creating a buffer stock of 3 million tonnes of sugar at government expense to absorb the surplus, allowing production of ethanol directly from sugarcane and not as a by-product and also transfer of assistance directly to the farmers instead of routing it through the sugar industry in the form of incentives.
"Sugar prices can be raised by two methods, one is by creating a buffer stock of 3 million tonnes, which would absorb the surplus and the second is by bringing back the release order mechanism.
The first option will burden the exchequer, while the second can be easily implemented," Sudhir Panwar, president of Kisan Jagriti Manch and member of Uttar Pradesh Planning Commission told Business Standard. He was part of the meeting.
"We have taken note of all the demands and will now discuss it with the chief ministers and other cabinet ministers on Thursday before arriving at a final solution," Paswan said.
The meeting is expected to be attended by chief ministers or representatives of 13 major sugarcane producing state, including Uttar Pradesh, Maharashtra and Karnataka, apart from Transport Minister Nitin Gadkari, Micro-Small and Medium Enterprises Minister Kalraj Mishra, Social Welfare Minister Maneka Gandhi, Agriculture Minister Radha Mohan Singh and Petroleum Minister Dharmendra Pradhan.
Paswan has called two separate meetings of farmers and chief ministers to resolve the cane arrear crisis. The sugar industry is finding difficulty in paying cane price to farmers as mills have been incurring losses for the last few years due to low realisation and high production cost.
The Centre has recently provided a subsidy of Rs 4,000 per tonne for the exports of 1.4 million tonnes of raw sugars to improve the cash-flow of the millers. Industry body ISMA has been demanding that the government give exports subsidy on white sweetener, create buffer stock of 2 million tonnes and also restructure millers' debt.
Ex-mill prices of sugar have fallen to Rs 21-24 a kg, while the cost of production is over Rs 30 a kg. Sugar production of India, the world's second largest producer, is estimated to be higher than the domestic consumption for the fifth year in a row.
The government has pegged sugar output at 26.5 million tonnes for the 2014-15 marketing year (October-September), as against 24.3 million tonnes in the previous year. The annual domestic demand is about 24.8 million tonne.