The decision, hailed by industry body ISMA, will cost Rs 1,147 cr to the exchequer
New Delhi : In the first ever direct subsidy payment to farmers, the government decided to pay sugarcane growers Rs 4.50 per 100 kg for the cane they will sell to loss-making millers, a move that will cost Rs 1,147 crore to the exchequer, reports PTI.
The government said the subsidy would be given to farmers attached to only those mills that achieve at least 80% of the mandatory export and ethanol blending targets.
The Cabinet headed by Prime Minister Narendra Modi decided to give a production-linked subsidy directly to cane growers, as export subsidy, which was provided in the last two sugar seasons 2013-14 and 2014-15 to millers, was questioned by many countries at the WTO.
The decision was hailed by the industry body ISMA, which said that millers’ cane price liability would reduce by about Rs 1,100 crore, thus partly compensating their losses. Sugar mills are facing a liquidity crunch due to surplus output that lead to low retail prices of the sweetener.
“To further ensure timely payment of cane dues in the current sugar season, the government has decided to provide a production subsidy at the rate of Rs 4.50 per quintal of cane crushed to offset cane cost,” an official release said.
The subsidy would be paid directly to farmers on behalf of millers and adjusted against the cane price payable to farmers towards FRP, including arrears of previous years. The remaining balance, if any, would be credited into the millers’ account, it said, adding that priority will be given to settling cane dues arrears of the previous years.
In Delhi, wholesale sugar prices increased by Rs 30 per 100 kg, while in Mumbai, they rose by Rs 36. Traders said the government’s decision on direct sugar subsidy to cane farmers could buoy sugar prices over the next few days, but the rally may not sustain, as more mills start crushing operations.
The Centre has fixed Fair and Remunerative Price (FRP) at Rs 230 per quintal for the 2015-16 season (October-September). With the subsidy being borne by the government, mills will now have to pay only Rs 225.5 a quintal to farmers. India, the world’s second largest sugar producer, is all set to produce surplus sweetener for the sixth straight year at 26-27 million tonnes in 2015-16. To liquidate surplus stocks, the government has made it mandatory to millers to export 4 million tonnes in the current season.
