Food Minister, Ram Vilas Paswan has approved the proposal to extend the export sugar subsidy as the sugar industry has huge stocks of sugar surplus. The prices of sugar are low and the approval of export subsidy of Rs. 4,000 per tonne of sugar has come as a ray of hope for both the sugar industry as well as sugarcane farmers who can hope to receive arrears of payment.
In February Rs 3,300 a tonne of subsidy was introduced for exports of 4 million tonnes of raw sugar. In August – September this was increased to Rs 3,371 a tonne. The export subsidy is a step that the Food Ministry has taken to help the cash-strapped industry so they can pay farmers on time especially after sugar prices declined below the cost of production. It will also help the manufacturers reduce their huge stocks. The present subsidy proposal has been signed by the Food Minister but will have to be approved by the Union cabinet before it comes into force.
In most of the sugar producing states the price of sugar is below the cost of production. In Maharashtra, which is a major sugar producing state, the price of sugar is Rs.2, 450 a quintal against the cost of production of Rs.3, 000 a quintal while in Uttar Pradesh the price is Rs.2, 750 as against the cost of production Rs.3, 500 a quintal. Indian Sugar Mills Association (ISMA) says that the industry debt has gone to Rs 36,500crore in 2012-13 from Rs.11, 500 crore in 2008-09.
India, the world’s biggest sugar producer after Brazil and has exported about 7 lakh tonnes of raw sugar in the market year that ended in October 2014. Raw sugar is mainly exported to China, Indonesia and the Middle East, and used by standalone refineries in those countries. The revision is being eagerly awaited as the sugar mills have to plan their production for the remaining 2-3 months of the crushing operations before it comes to an end.
The sugar industry had wanted the incentive to continue and have been eagerly awaiting the notification. They have also been looking forward to more bank loans. On the other hand farmers associations say that mills that do not pay farmers, after receiving incentive within 15 days on procuring sugarcane should be punished. Kisan Jagriti Manch, Lucknow feel that farmers will continue to suffer and the only way out was to have mechanisms that would bring about price correction.