India might consider white sugar export incentive as cane arrears cross Rs 19,000 cr

Food Minister Ram Vilas Paswan calls meeting of chief ministers on April 16

India might consider giving cash-strapped sugar companies an incentive to export white (refined) sugar, if mills agree to pay their dues to millions of cane growers, said a Reuters news report on Wednesday, quoting Food Minister Ram Vilas Paswan. The minister also said a meeting of sugarcane growers had been called on April 15, followed by a meeting of producing states on April 16.  

Sugarcane arrears, according to the Centre’s estimate, had crossed Rs 19,000 crore as on March 31. Of the cane arrears in the 2014-15 marketing year, the highest, Rs 9,715 crore, belonged to mills in Uttar Pradesh, followed by Rs 2,864 crore in Maharashtra, Rs 2,402 crore in Karnataka, Rs 682 crore in Punjab, Rs 656 crore in Tamil Nadu, according to official data.

“The situation of sugarcane farmers is very bad,” Paswan said, addressing reporters later in the day. “The arrears have touched Rs 19,243 crore so far this year. The Centre does not have much role to play after the decontrol of the sugar sector.”

Paying off the arrears would help put money in the pockets of farmers who have suffered crop damage due to untimely rains  and lost income as a result of falling world commodity prices. “Farmers have been hit hard by unseasonal rains in the past few weeks. The payment cannot be better timed, as it will help tide them over the crisis,” Paswan said. “The government is willing to consider the demand of the industry so that the mills’ financials do not worsen. But we need an assurance that cane arrears to farmers are cleared as early as possible.”

Mills complain that higher government-set cane prices have destroyed their profit margins.

Paswan said: “We have to strike a balance to protect farmers’ interests and ensure that cane crushing remains viable for mills. I’ll separately talk to farmers and mills to ensure that.”

India already gives a subsidy of Rs 4,000 a tonne for raw sugar exports.

($1 = 62.30 rupees)