Nabard meet on ailing sugar industry today

The Maharashtra sugar industry, which is battling with bumper sugarcane production and falling prices of sugar in the international market, is likely to get a helping hand from National Bank for Agriculture and Rural Development (Nabard).

A meeting to discuss the industry demands such as extending the moratorium period for loans has been called by the bank's Chairman USP Thorat on Tuesday.

The meeting, which is going to be held at the bank's headquarters in the city, will be attended by Union Agriculture and Civil Supplies Minister Sharad Pawar and the chairmen and managing directors of more than 100 sugar cooperatives from the state.

Speaking with Business Standard, managing director of the Maharashtra State Sugar Co-operative Factories Association Limited (MSSCFAL) Prakash Naiknavare said, "When Nabard announced its Rs 1725-crore package to revive the ailing sugar industry in the state, the ground conditions were quite different from what they are today. Two years ago, sugar co-operatives were fighting over non-availability of sugarcane. Today, there is pressure on them to crush as much sugarcane as possible despite the falling prices of sugar. In light of this, there is a need to revise the Nabard's package and tomorrow's meeting has been called to discuss the issue".

In 2005, Nabard had announced the Rs 1725-crore package to revive the sugar industry. Under the package, the existing loans of sugar co-operatives were rescheduled to 10 years and a moratorium of two years was imposed on the recovery of loans.

Besides, an interest rate of 10 per cent per annum was fixed on these loans and it was decided that the Centre will pay the difference to the financial institutes through Nabard.

The package was availed of by 129 sugar co-operatives and private factories from the state. Sugar medium grade is traded at Rs 1436 a quintal and lower grade at Rs 1416 a quintal, and in the spot and futures market it is traded at Rs 1383 and Rs 1316 respectively.

Sugar cooperatives are thus not in a position to pay even the statutory minimum price (SMP) announced by the state government. Hence there is need for considerable reworking of the package, said Naiknavare.

Besides extending the moratorium period, issues such as the cost of conversion and harvesting will be discussed in tomorrow's meeting, Naiknavare said.

When Nabard had announced the package in 2005, 38 sugar co-operatives could not avail of the package due to norms laid down by Nabard. Of the 38, 21 have been working due to the availability of sugarcane. The meeting will decide whether these factories can now avail of Nabard's package or not.

Though around 17 financially sound sugar factories had opted out of the Nabard's package, some might now like to avail of the package considering today's situation, Naiknavare pointed out

Speaking with Business Standard chairman of consumer cell-Congress, Kanhyalal Gidwani said, "These packages aim at giving the sugar co-operatives some breathing space as far as their finances are concerned, but what really needs to be done is that the state government should announce transport subsidy on the lines of Uttar Pradesh and Bihar so that the piled-up stock in factory godowns is reduced".