Cane arrears down at Rs 2,700 cr as mills' cash flow improves

Arrears to be paid by mills to sugarcane farmers have come down to Rs 2,700 crore this year so far from a peak of Rs 21,000 crore, thanks to several steps taken to boost liquidity of sugar manufacturers, the government said today.

Cane arrears had touched Rs 21,000 crore in April of the 2014-15 sugar season (October-September) as sugar prices were subdued due to surplus sugar production for last five years.

"The measures taken by the government to improve liquidity of sugar mills enabling them to clear cane price dues of farmers, have a salutary effect on reduction of cane price arrears for the 2014-15 sugar season," the Consumer Affairs, Food & Public Distribution Ministry said in a statement.

As on January 12 of this year, cane arrears have declined to Rs 2,700 crore from Rs 21,000 crore in April 2015, it said.

In last one year, the Ministry said, the government has taken several measures to improve liquidity position of sugar mills enabling them to clear cane prices dues to farmers.

The government has provided incentive on raw sugar export, extended financial assistance in the form of soft loan, fixed remunerative price for and waived off excise duty on ethanol supplied under Ethanol Blending Program (EBP) and more recently a production subsidy to sugar mills to offset cost of cane and facilitate timely payment of cane price dues, it added.

It is also noteworthy that the sugar industry is now active in the Ethanol Blending Program, by supplying 6.82 crore litres of ethanol to Oil Marketing Companies during the current sugar season (since October, 2015) as against mere 1.92 crore litres supplied during the corresponding period in the last season.

Furthermore, the contracted quantity under EBP is at an unprecedented 120 crore litres in the current season which is a historic high, it added.

India is all set to produce surplus sugar for the sixth straight year at 26-27 million tonnes in 2015-16 season.