Agriculture Minister Sharad Pawar is seeking export of another one million tonnes of sugar, in addition to the permitted two million tonnes, to increase cash flows of the sugar industry and end sugarcane price arrears, which have jumped to Rs 6,000 crore.
In a letter to Prime Minister Manmohan Singh earlier this month, Pawar also urged that ethanol price be fixed at the earliest.
Pawar has said the realisation of sugar price is Rs 200-400 per quintal below the production cost, causing losses to mills. “Another round of export of one million tonnes will definitely have a positive impact on the cash flow of the mills, thereby reducing sugarcane arrears. As the export window is open only till May-June, a decision will have to be taken at the earliest,” Pawar said. The delay in taking a decision on sugar export last year, he said, is estimated to have caused a loss of almost Rs 1,500 crore as international prices softened.
Pawar said export permit of two million tonnes has not been able to ease the cash flow constraint of the industry. The most important assistance the sugar industry would require would be an immediate improvement in cash flows and fund availability to pay sugarcane price.
The export permission of two million tonnes has not impacted domestic sugar prices as the country is estimated to have surplus production of three million tonnes this season (October-September).
Pawar has requested Singh to conclude the exercise of finalising ethanol price to facilitate a ‘vibrant ethanol blending programme’ with petrol for the country’s benefit and to improve the cash flow of industry. He said that for the last 16 months, the sugar industry is getting a provisional price of Rs 27 a litre, which is lower than domestic and international ethanol prices. “At a time when global oil prices are very high and rising, we should be doing all we can to encourage the production of such renewable substitutes rather than discouraging producers.”
Pointing to the losses of the industry, Pawar said the continued financial losses to the sugar mills will only result in massive sugarcane price arrears to farmers and force them to shift to other crops and drive the country to become a net importer of sugar.
