India’s final sugar output is much higher than expected. A problem of plenty is likely to affect sugar mills unless the government steps in
Indian Sugar Mills Association (ISMA) Director General Abinash Verma said mills interest burden will reduce by Rs 800-900 crore with government providing the interest subvention.
Union Minister for Road Transport and Highways Gadkari laid the foundation stone of the Rs 5,000-crore Panipat-Khatima highway project. He also laid the foundation stone of a Rs 232-crore project under the Namami Gange programme.
The increase of Rs 2 per kg in the minimum selling price of sugar is much less than what the industry wanted but even this comes with strings attached. The government wants cane arrears cleared.
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Sakshi Batra discusses with Gaurav Choudhury , Policy Editor of Moneycontrol, the implications of this new policy on sugarcane farmers who have still not been paid arrears to the tune of Rs 13000 crore.
Sugar production of India is estimated to rise to 35.5 million tonnes in the next 2018-19 marketing year (October-September) from 32.5 million tonnes in the current year on the back of higher cane output.
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According to industry estimates, sugar mills owe arrears to the tune of nearly Rs 20,000 crore to the farmers.
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The record arrears, up from 20 billion rupees in the previous year, will force the world's second-biggest sugar producer to provide incentives for exports, increasing pressure on global sugar prices.
Mills in Uttar Pradesh owe farmers 72 billion rupees, while mills in Maharashtra have delayed payments of 25 billion rupees, the Indian Sugar Mills Association (ISMA) said in a statement.
Mills in Uttar Pradesh have maximum cane price arrear at Rs 5,136 crore, followed by Karnataka - Rs 2,539 crore and Maharasthra - Rs 2,348 crore.
To improve liquidity of millers, the government should remove export duty of 20 per cent and allow shipment of 2 million tonnes immediately, it said in a statement.
Cues from global markets pulled soya bean prices to a 2-week low, while there was added pressure over farmers protesting in India.
As per the government data, sugar output is estimated to be higher at around 25 million tonne (MT) in the ongoing 2017 -18 season (October-September), as against 20.2 MT in the previous year.
India, the world's second-biggest sugar producer, requires the processors to pay cane farmers within two weeks of harvest. The mills agreed in May to pay the farmers 11 percent more for their cane for the 2017/18 marketing year, which started on Oct. 1.
According to a report by ICRA, the domestic sugar production for the sugar year 2018 is likely to increase by 23 percent to around 25.0 million tonnes, driven principally by a recovery in production across India.
The state raised the cane price to 315 rupees ($4.85) per 100 kg for the crop year that began this month, up from 305 rupees in the previous year, the state official, who declined to be named because he isn't authorised to speak with media, told Reuters by telephone.
Sugar production of India, the world's second largest producer after Brazil, is estimated at 20.2 million tonnes in the ongoing 2016-17 marketing year (October-September).
Sugarcane has been sown in more area at 49.15 lakh hectare till last week of 2017-18 crop year (July-June), as against 45.22 lakh hectare in the year-ago period, as per the Agriculture Ministry's data.
"Out of the total outstanding cane dues of Rs 25,836.46 crore for crushing season 2016-17, a payment of Rs 22,807.53 crore was made to cane growers till July 14. This is 89.84 per cent of the total dues," state Sugarcane Minister Suresh Rana said.