Sugar crisis: High level meet today to discuss relief

Interest-free loans likely on agenda

The Centre has convened a high-level meeting on Wednesday which is expected to discuss a relief-package for the crisis-ridden sugar industry in Uttar Pradesh (UP) and Maharashtra, which could include interest-free loans from banks.

According to officials, a decision on giving mills access to interest-free loans from banks — one of the main demand of the millers — is expected to be taken up in the meeting, which is likely to be attended by the ministers of food, agriculture, commerce, finance and petroleum. Under the interest-free loan programme, millers can borrow funds from banks while the Centre will bear the interest cost on their behalf. A similar scheme was introduced a few years ago when the mills had faced a cash crunch.

The meeting, officials said,  is also expected to discuss the issues of raising import duty on sugar from the existing 15 per cent to 50 per cent, creating a buffer stock of around five million tonnes, relaxation in tenure of loans given to sugar factories, export incentive and other measures. “In total, a package of around Rs 50,000 crore could come up for discussion on Wednesday,” a senior government official said. He said sugar mills in both the states are facing a crisis because production in 2013-14 (October-September) is expected to be much more than consumption.  

Sugar industry in Uttar Pradesh and Maharashtra — the two largest producing states — have not yet started crushing sugarcane in the new crop year, which started in October, citing mounting cane arrears, huge unsold stocks and the inability to pay high price to farmers.

Officials said millers across India owe around Rs 3,400 crore to farmers on account of sugarcane purchased from them last year.

In UP, cane was purchased at Rs 280 a quintal in 2012-13 (October-September).

Even though farmers are demanding a higher price in excess of Rs 300 per quintal, an industry source said the millers can’t pay more than last year’s price (Rs 280 a quintal). “We are in no position to pay a higher sugarcane price this year as our cash position is precarious due to drop in sugar rates both in the domestic and international markets.”

“We urgently need to dispose of 1.75 million tonnes of unsold sugar stocks lying with us, only then can there be any crushing,” he added.