Why govt’s sugar intervention does not solve much on ground

NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) has approved a ₹7,000 crore package to deal with the crisis in sugar industry (₹8,500 crore if the ₹1,540 crore announced earlier is included) .

A slump in prices following a glut in production has created around ₹22,000 crore in pending arrears for sugar cane farmers. Unlike rice and wheat, where the government procures the crop at Minimum Support Prices (MSPS), sugar cane farmers sell their produce to sugar mills at government-notified Fair and Remunerative Prices (FRP).

While welcoming the limited relief the package will bring, sugar industry also thinks that it is inadequate for the sector.

A press release issued by Indian Sugar Mills Association (ISMA) says that for the mills to be able to pay FRPS to sugarcane farmers, ex-mill sugar prices need to be ₹35 per kg.

The CCEA has fixed sugar prices at ₹29 per kg at the moment.

While the FRP for sugar cane increased by 10.8% in the current year, the highest in the last 5 years, sugar prices have fallen by more than 24% since the beginning of this season in October 2017 according to sugar price data by National commodity exchange (NCDEX).

India’s sugar production has increased by an average 8-9% in the last eight years.

This has been owing to the usage of a higher-yielding variety of sugar cane Co-0238 by farmers.

While the country’s production is increasing, its exports have fallen in the last five years except in 2015-16 owing to a global supply glut and falling global sugar prices.