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Union Food Minister Ram Vilas Paswan said on Wednesday the central government was ready to extend export subsidies to Uttar Pradesh’s sugar mills and give additional interest-free loans to clear cane arrears.
“The government is open to extending export subsidy on raw sugar and providing additional interest-free loans to mills to clear cane arrears, provided mills give the guarantee,” Paswan told PTI in an interview. He made it clear to mill owners that threats were not the right way to solve problems because farmers had other options.
Facing payouts of around Rs 4,500 crore as cane arrears to farmers, private millers in Uttar Pradesh, the second largest sugar-producing state, have threatened to shut operations this year if cane prices are not linked to sugar rates.
Paswan expressed confidence that the stand-off between the state government and the mills over cane pricing policy would be resolved but criticised the millers’ decision for first agreeing to pay higher cane price fixed by the state and later showing their inability to make payment to farmers.
“Uttar Pradesh millers are threatening to shut down operations. Who are they threatening? Are they threatening farmers? Farmers have many options. What options do mills have? Farmers can grow other crops such as wheat. But sugar mills, set up with crores of rupees of investment, cannot be converted into milk units,” Paswan said.
The minister said it was not the right approach for mills to call for suspension of their crushing operations if they were facing losses. “Do they share profits with the farmers when business is doing well?”
The minister was also of the view that mills should have not agreed to pay the higher cane price of Rs 280 a quintal for the 2013-14 season as fixed by the Uttar Pradesh government against Rs 210 a quintal announced by the Centre.
“When the Centre fixes Rs 210 a quintal cane price, why mills are ready to pay Rs 280 a quintal price fixed by the state. Mills should have opposed then and there. Firstly, mills agree to pay the price fixed by the state and later you say you won’t be able to pay this price,” he said.
Asked if the country’s sugar production and prices will be affected due to the millers’ threat to close operations in Uttar Pradesh, Paswan said, “No. We have sufficient stock.” Paswan also said the Centre will wait and watch what actions the state government will take to resolve the issue.
“We take threats seriously. The Centre cannot do much. The cane arrears are more in the state. It should be solved between the state government and mills. Let the Uttar Pradesh government think how they can solve this issue. The state government can take any action. It can sell mills for clearing cane arrears.” On continuation of export subsidy on raw sugar and providing additional interest-free loan to cash-starved mills, Paswan said, “We are not negative on this issue. We will think on this.” However, the minister said these two measures would be announced only if mills guarantee that they use the funds for clearing cane arrears.
Early this year, the United Progressive Alliance government had announced an additional interest-free loan of Rs 6,600 crore for mills exclusively to make cane payment. It had also announced export subsidy on raw sugar. So far, Rs 5,500 crore has been sanctioned to mills, which have not yet submitted a report on whether the money has finally been used for paying cane dues, Paswan said.
It may be recalled that export subsidy were fixed at Rs 3,571 a tonne for the period August-September. The subsidy has since ended.
