The Indian Sugar Mills Association (ISMA) has urged the Centre to fix the minimum ex-mill sugar price at Rs 36 a kg to cover production cost. The ISMA submitted a memorandum in this regard recently to the department of Food and Public Distribution. The industry sources said the average ex-mill price in Uttar Pradesh was Rs 31.50 a kg and in Maharashtra Rs 29.70 a kg.
According to the association, the crushing of cane for the next sugar season (October 2018-September 2019) will commence in October this year with production expected to be about 3.5 crore MT. The mills usually complete crushing of cane by April and they will have to pay a fair remunerative price (FRP) of Rs 97,000 crore to farmers next season. The price to be paid by the UP sugar mills is higher as compared to Maharashtra and south Indian states. UP government fixes the State Advisory Price which is higher than the FRP fixed by the Centre.
The UP Sugar Mills Association sources said that focused steps were needed to increase ex-mill prices so that the industry was able to pay farmers the cane cost. The Centre should give a push to exports and raise the domestic ex-mill price to Rs 36 a kg. On the export front, the government should announce its policy for the next sugar season in another two weeks so that export contracts could be finalised and sugar mills get orders to make raw sugar.
The UPSMA sources said the ISMA officials had visited several countries, with some delegations led by government officials, to explore about the export opportunities. Refineries and importers in Bangladesh, Dubai, and China have shown interest to enter into long-term import contracts for raw sugar from October this year. However, exporters are unable to give commitments. These countries want the sugar at prices on a par with countries such as Brazil and Thailand. At the current global prices, Indian sugar mills will have to bear a loss of almost Rs 13 a kg. So the association suggested fixing the minimum ex-mill sugar prices in the domestic market at Rs 36 a kg. Further, it should permit export of 60 lakh to 70 lakh tonnes of raw sugar next season. The low global sugar prices had hit the sugar mills and farmers alike. UP had witnessed the longest sugarcane season extending from October 15 to June end 2018, with the result that the state clocked record sugar production of 1.2 crore MT). The depressed sugar prices in global and domestic market had pinched the mills and farmers. At present, the UP sugar mills have cane payment outstanding of over Rs 10,000 crore. UP government has assured that it was trying to facilitate complete payments by mid October this year. In the supplementary budget for current fiscal 2018-19 passed during the monsoon session of the assembly the government has allocated more than Rs 5,500 crore to the sugar sector, including Rs 4,000 crore to be given as soft loan to mills and Rs 500 crore for the cooperative and government sector mills for payments. Besides, the cooperative units have been allocated Rs 1,000 crore to settle payment commitments for 2017-18 and 2016-17 seasons. Chief Minister in the assembly had said the farmers trusted his government on the issue of cane payments, which was reflected in higher sugarcane acreage of 2.67 million hectares (MH) in 2018-19 compared to 2.30 MH in 2017-18 seasons.