AP to offer subsidy to sugar mills

Excess sugarcane production creates crisis.

Andhra Pradesh government is working out modalities to offer subsidy to sugar mills for crushing additional sugarcane in a bid to avert a major crisis arising out of excess cane production and a steep fall in sugar prices.

Good monsoon and remunerative prices had encouraged many farmers in the state to go in for sugarcane cultivation without entering supply agreements with the sugar mills resulting in over 30 per cent excess production this year.

The sugarcane area has increased to 2.5 lakh hectares as compared with 2 lakh hectares resulting in about 160 million tonnes of cane production as compared with 123 million tonnes crushed last year.

The crisis being faced by the sugar industry across the country on account of glut and fall in both domestic and international prices has now trickled down to farmers resulting in governments of sugarcane growing states like Andhra looking for ways to come to their rescue.

The Centre's delay in taking a decision on allowing sugar exports has been cited by the industry as a major cause for the present dilemma.

Sugar prices have fallen to Rs 1,250 per quintal in local market as compared with Rs 1,800-Rs2,200 per quintal a year ago. The prices in Tamil Nadu and Karnataka are said to be even lower than those in Andhra.

"Anticipating the crisis, the state government, in a humanitarian gesture to help the farmers, has decided to give subsidy to sugar mills for crushing the additional sugar cane available with the farmers," J Geeta Reddy, minister for sugar and Industries, told Business Standard.

While the normal cane crushing season is almost coming to a close, the sugar mills require to continue the operations up to May to handle the extra crushing, according to the minister.

This will also result in the fall in recovery rate of the remaining cane, which also has to be taken into account in providing subsidy to sugar mills, the minister said.

At a meeting held on Monday, chief minister Y S Rajasekhara Reddy instructed the officials to ensure that the sugar mills first completed the crushing of cane of those farmers who had previously entered into an agreement with mills for supply of the same while asking them to work out modalities for additional cane crushing.

So far about 112 million tonnes of cane has been crushed by 37 sugar mills operating in the state as compared with 85 million tonnes during the corresponding period last year.

The state government revived about 11 co-operative sugar mills and proposing to enhance their crushing capacity, besides starting co-generation in each of these mills.

Though the Centre had lifted ban on sugar exports in January this year, the move failed to helped the sugar industry with the international prices coming down to $ 340 per tonne from $ 450 per tonne by then.