Production subsidy to sugarcane farmers to push exports

The Dollar Business Bureau

The subsidy shall be paid directly to the farmers on behalf of the mills and be adjusted against the cane price payable to the farmers towards Fair Remunerative Price (FRP) including arrears relating to previous years

    As part of measures to ensure better market support to the sugar industry, the government on Wednesday announced production-linked subsidy of Rs.4.50 per quintal to cane farmers during 2015-16 season to help cash-starved sugar mills clear arrears. The move that would cost the exchequer of about Rs.1, 147 crore is also expected to help liquidate sugar stocks and meet the export target to the extent of 80%. “The subsidy shall be paid directly to the farmers on behalf of the mills and be adjusted against the cane price payable to the farmers towards Fair Remunerative Price (FRP) including arrears relating to previous years. Subsequent balance, if any, shall be credited into the mill’s account. Priority will be given to settling cane dues arrears of the previous years,” said an official release. The government has already notified mill-wise Minimum Indicative Export Quota (MIEQ) for sugar exports and also a national grid that would supply ethanol to Oil Marketing Companies (OMCs) via distilleries attached to sugar mills under Ethanol Blending Programme (EBP). Performance-based production subsidy will be provided to those mills which have met at least 80% of the targets notified under the MIEQ. Earlier, the government had waived the excise duties on ethanol in the current sugar season, resulting in Rs.5/ liter extra revenue realization to incentivize ethanol supplies. The move prompted oil marketing companies to order for the supply of 103 crore litre of ethanol. This led to a substantial increase in the industrial application of the sweetener as compared to 32 crore litre used during the previous sugar season.  Disbursal of soft loans up to Rs.4,047 crore along with providing one year moratorium on the same and assurance to bear the interest subvention cost to the extent of Rs.600 crore were some of the major initiatives taken by the government to offset the surplus stock of sugar in the country and held cash-starving sugar producing units.   During this season, the country is estimated to produce surplus sugar at 26-27 million tonnes for the sixth consecutive year, while the domestic consumption is estimated to be less than 22 million tonnes. To liquidate surplus stock, the government has also made it mandatory for millers to export at least 4 million tonnes in the current season.  

November 19, 2015 |4:16pm IST