Concerned over Rs 20,000 crore of cane arrears to farmers, the government is preparing a long- term policy for the cash-starved sugar sector to ensure timely payment to growers.
Food Minister Ram Vilas Paswan said the Centre has taken various measures, including hike in import duty and Rs 6,000 crore soft loan, to help sugar mills clear cane arrears but the situation has not improved.
The long-term policy could promote diversion of sugarcane for production of ethanol and other by-products.
"We have taken couple of measures to ensure sugar mills are able clear dues to farmers. However, there has been no improvement. We are working on a long-term plan to address the sugar sector issues," Food Minister Ram Vilas Paswan told reporters here.
Paswan said although the solution lies in bringing down area under sugarcane, the government "cannot force farmers not to grow sugarcane."
"We can only ask mills to manufacture less sugar and focus on other by-products," he said.
Stating that the sugar industry's suggestion to create buffer stock was not feasible, he said: "So, a long-term policy is being worked out."
According to sources, the food ministry has already moved a note in this regard to the PMO.
Surplus production of sugar has resulted in depressed prices of sweetener in the retail market, leading to huge cane arrears to farmers that still stand at over Rs 20,000 crore.
Sugar production of India, the world's second largest producer and biggest consumer, is estimated at record 28.3 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. Opening stock of sugar is seen at 10.3 million tonnes when mills start new marketing year in October this year.
