The department of food has estimated a total production of 25 million tonnes of sugar in the new sugar season starting October 2014 – September 2015, similar to the production level last year.
This is higher than the first advance estimate of 24.5 mn tonne and the increased production is estimated due to higher acreage in Maharashtra and Karnataka and carries over stock of 3-4 lakh tones.
Fearing surplus production may bottom out the prices, the ministry proposes to continue with export of raw sugar and continue with the proposed subsidy for coming two seasons.
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However like earlier, it may not be an export under open general license and this free but the quantity of sugar is expected to be curbed at 10-12 lakh tonne while the amount of subsidy will hover around RS 3,000-3,000 per metric tonne.
Sources said the payment arrears have come down to around Rs 1,000-2,000 crore. The Supreme Court upheld the directive of the Allahabad High Court to sugar mills in Uttar Pradesh that they should sell the sugar stocks hypothecated to the banks in order to clear the arrears of the sugarcane farmers.
The banks had filed a petition challenging the directive in the Supreme Court, which has been struck down. According to reports, the banks have an exposure of Rs 3,000 crore to the mills, and they fear these loans might now turn into non-performing assets, because they will fall short on collateral.
On August 13, the HC had directed mills to liquidate 15 percent of their respective sugar stock within three weeks at the floor price of Rs 3,100/quintal to pay arrears. In its affidavit, UP Sugar Mills Association (UPSMA) had informed court yesterday 65 of 95 mills had sold nearly 2,35,862 tonnes of sugar till August 31 and collectively deposited over Rs 700 crore with the respective district magistrates.
State Bank of India (SBI), Punjab National Bank (PNB) and UP Cooperative Bank had also staked preferential right on the liquidation proceeds of sugar stock, contending the mills had taken working capital loans based on the stock.