Worried at cane arrears to farmers mounting to Rs 21,000 crore, NCP chief and former Agriculture Minister Sharad Pawar today led a delegation to Prime Minister Narendra Modi demanding that the Centre create sugar buffer stock to bail out cash-starved mills.
The delegation, comprising MPs, representatives of the co-operative factories and the Indian Sugar Mills Association (ISMA), raised issues afflicting the sugar industry with the Prime Minister.
"It is a matter of grave concern that the outstanding unpaid arrears of our sugarcane farmers for 2014-15 sugar seasons alone is over Rs 21,000 crore, the highest ever in the history of the Indian sugar sector," Pawar said in the representation made to the Prime Minister.
Sugar is being sold by mills Rs 6-8 per kg lower than cost of production and current prices are the lowest the last six years, he said.
"My understanding is that the government buy out 10 per cent sugar production is the best and possibly the only solution in the short run to solve the current crisis of the sugar sector and the quickest way to reduce the cane price arrear of our farmers," Pawar said.
When asked about the outcome of the meeting, Pawar said the Prime Minister has realised the situation is serious. "He was anxious to resolve the issue," he added.
If the Centre decides to buy 10 per cent of sugar output from mills, Pawar said that this will give around Rs 8,500 crore of cash flow, which can be utilised to repay dues to farmers.
The NCP chief also suggested that the Centre can give interest-free loan to state agencies like FCI, MMTC and STC to buy sugar from the mills and interest burden could be met from the sugar development fund.
Recently, the Centre had hiked the import duty on sugar to 40 per cent from 25 per cent and removed exise duty on ethanol from next marketing year starting October 2015.
Pawar said that these decisions could be helpful in the long run. "Nothing has, however, been done to solve the current crisis of surplus sugar and depressed domestic sugar prices," he observed.
The delegation sought creation of buffer stock for five million tonnes at mill level for two years. It also demanded financial restructuring of loans.
The meeting was attended by MPs Prabhakar Kore (BJP), Supriya Sule (NCP), Maharashtra State Cooperative Sugar Factories Ltd Chairman Vijaysinh Mohite Patil, National Federation of Cooperative Sugar Factories Ltd President Kallappa Awade and ISMA Director General Abinash Verma.
India's sugar production is estimated to touch 28 million tonnes in 2014-15 marketing year (October-September), as against 24.3 million tonnes in the previous year.
The total annual demand is pegged at 24.5 million tonnes, while exports are projected at 0.7 million tonnes. This means, the country would have an opening stock of 10.3 million tonnes of sweetener when mills start new marketing year in October.
