CCEA approves comprehensive policy to deal with excess sugar production

In order to help sugar mills to clear cane dues of farmers, the Government has decided to provide financial assistance @ of Rs. 13.88 per quintal of cane crushed in sugar season 2018-19 to sugar mills to offset the cost of the cane.

Due to excess carryover stocks and an indication of similar excess production in the ensuing sugar season 2018-19, the liquidity problem of the sugar mills is likely to persist in the coming sugar season too. As a result, cane price arrears of sugarcane farmers may also peak at an unprecedented high level.

In order to mitigate the situation, the Cabinet Committee on Economic Affairs chaired by Hon'ble Prime Minister Shri Narendra Modi has approved following measures involving total assistance of over Rs. 5500 crore to support the sugar sector by way of offsetting cost of cane and to facilitate export of sugar from the country thereby improving liquidity of the industry enabling them to clear cane price arrears of farmers:

• To provide assistance to sugar mills by defraying expenditure towards internal transport, freight, handling, and other charges to facilitate export during the sugar season 2018-19 @ Rs. 1000/MT for the mills located within 100 km from the ports, @ Rs. 2500/MT for the mills located beyond 100 km from the port in the coastal states and @ Rs. 3000/MT for mills located in other than coastal states or actual expenditure, whichever is lower. The total expenditure on this account would be about Rs.1375 crore which will be borne by Government.
• In order to help sugar mills to clear cane dues of farmers, the Government has decided to provide financial assistance @ of Rs. 13.88 per quintal of cane crushed in sugar season 2018-19 to sugar mills to offset the cost of the cane. The assistance shall be provided to only those mills which fulfill the conditions as stipulated by the Department of Food & Public Distribution. The total expenditure on this account would be about Rs.4163 crore which will be borne by Government.
• To ensure payment of sugarcane dues of farmers, both the assistance would be credited directly into the accounts of farmers on behalf of sugar mills against cane price dues payable to farmers against FRP including arrears relating to previous years and subsequent balance, if any, would be credited to Mill's account. Assistance shall be provided to those mills which will fulfill the eligibility conditions as decided by the Government.

Due to depressed market sentiments and crash in sugar prices, the liquidity position of sugar mills was adversely affected in the sugar season 2017-18 leading to accumulation of cane price dues of sugarcane farmers which reached an alarming level of about Rs. 23,232 crores in the last week of May 2018.

(With inputs from PIB)