~55-bn fresh bailout package for sugar mills gets go-ahead

With sugarcane arrears around ~130 billion ahead of the start of the new crushing next month, the Centre on Wednesday approved a fresh ~55.38-billion package for the industry, of which around 75 per cent will be directly paid to growers, provided mills export five million tonnes of the sweetener.

To facilitate the exports, a transport subsidy of ~13.75 billion was approved as part of the relief package. The subsidy will be given at the rate of ~1,000 per tonne to mills located within 100 km from ports, ~2,500 a tonne for mills beyond 100 km from ports in coastal states and ~3,000 per tonne for mills in non-coastal states, an official statement said.

The direct assistance of ~13.88 per quintal of cane crushed will be given to farmers from the 2018-19 season that starts from October. However, to avail the assistance, mills will have to export their share of five million tonnes of their export quota.

The quantity of sugar to be exported by each mill will be determined on the basis of the last three years’ production and the assistance to farmers will be released once the export obligation is fulfilled.

In the 2017-18 sugar season, a similar direct assistance of ~5.5 per quintal totalling about ~15.40 billion was extended to mills, provided they exported 2 million tonnes of sugar.

However, due to suppressed international market, mills could export just 0.4-0.5 million tonnes of the obligatory quota.

“This is a welcome move, especially because exports are the dire need of the hour. The export subsidy for sugar mills located near the ports will help Maharashtra, Karnataka, and Gujaratbased units to start exporting raw sugar from next month,” Prakash Naiknavare, managing director of National Federation of Cooperative Sugar Factories (NFCSF), told Business Standard.

Abinash Verma, director general of Indian Sugar Mills’ Association, said the government’s decision to pay ~13.88 per quintal of sugarcane as part of FRP directly to the farmers will reduce the industry’s cane price liability by around 5 per cent over the next year’s FRP of ~275 per quintal of sugarcane… and will substantially lower expenditure and working capital requirement of sugar mills in the next year.