Sugar industry knocks on PMO door for a sweetener

It is seeking steps so that mills can clear dues to the tune of ~225 billion to farmers

The ~1-trillion domestic sugar sector is staring at an unprecedented crisis of lower realisation and market glut resulting in a whopping ~225 billion outstanding, which mill owners owe the farmers.

This has prompted the beleaguered industry to knock on the doors of the Prime Minister’s Office (PMO) for succour.

Representatives of private and public sector sugar mills have urged the Centre for extending immediate support to the industry by way of export assistance and increasing the sugar minimum support price (MSP) fixed by the central government.

Earlier this month, the Centre had announced a ~70 billion package to ease liquidity crunch in the sugar sector and fixed MSP of white sugar’s (refined) selling price at ~29/kg.

However, the industry maintained that the announcements were grossly inadequate to bail out the sector given the enormity of the crisis.

The meeting was chaired by Prime Minister Narendra Modi’s principal secretary Nripendra Mishra and also attended by the Union food secretary.

Sources told Business Standardthat the industry demanded that the sugar MSP be revised to almost ~35/kg for Uttar Pradesh, the country’s top producer, and ~33/kg for mills located in the western and southern regions, notably Maharashtra, Karnataka and Tamil Nadu.

Till last month, the domestic mills’ collective unsold sugar inventory of the current season was around 55 per cent. “The PMO sought details about the possible sugar export markets and whether it could be promoted in the government-to-government (G2G) or business-to-business (B2B) categories. However, there was no explicit commitment, although the PMO has given assurance that it will look into the matter,” sources added.

Meanwhile, UP’s sugar industry, which accounts for almost ~125 billion of the total sugarcane arrears, has urged the Yogi Adityanath government for giving it “direct subsidy” to clear the massive outstanding. ‘Direct subsidy’ implicitly means urging the state to repay farmers directly to clear dues, an industry official said, requesting anonymity.

UP mills pay the highest sugarcane price in India of ~315/quintal for the common variety against the much lower fair and remunerative price (FRP) of ~255/quintal fixed by the Centre. The state mills run up maximum arrears, since mills in other major sugarcane producing states either pay the FRP (Maharashtra) or peg their cane payments according to the revenue sharing model (Karnataka and Tamil Nadu).