Thomas discusses financial package to sugar mills with FM

He also deliberated on the ongoing logjam between UP govt and private sugar mills over higher sugarcane price of Rs 280 per quintal fixed by the state

Food Minister K V Thomas today met Finance Minister P Chidambaram and discussed the issue of providing a financial package including interest-free loans to the beleaguered sugar mills in the country.

He also deliberated on the ongoing logjam between the Uttar Pradesh government and private sugar mills over higher sugarcane price of Rs 280 per quintal fixed by the state.

"We discussed about the sugar issue. We are working on a financial package and discussing interest-free loans to mills," Thomas told PTI after meeting the Finance Minister.

Recently, Maharashtra Chief Minister Prithviraj Chavan had met Prime Minister Manmohan Singh and made a representation for bailing out the sugar industry. "The Prime Minister has sent me a note. I am going through it," he said.

Chavan said the UP sugar industry issue was also discussed.

Meanwhile, the Food Ministry is working on a Cabinet note on giving a financial package to the sugar industry.

The sugar industry is facing financial crunch after a huge loss last year due to increased cost of production and lower price. Cash-starved mills have not been able to pay their dues to sugarcane farmers and their arrears stood at Rs 3,400 crore last year.

In Uttar Pradesh, many private mills have shut down crushing operations till the time the government comes up with a 'viable' cane price policy. The state authorities have filed FIR against three mill owners for not commencing operations.

Uttar Pradesh is the second biggest sugar producer after Maharashtra. Any delay in crushing of sugarcane in Uttar Pradesh is likely to affect the country's overall sugar production.

Later, Thomas also met PMEAC Chairman C Rangarajan on the issue.