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Sugar crisis: Bitter conditions need urgent correction before we have suicides |
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The domestic demand for sugar in India is around 23 million and the projected production for this season, which just ended in September, is about 25.3 million tonnes (mt). This leaves a surplus of about 2 mt and the carryover stocks from the last season is 7.5 mt. In simple terms, we have too much sugar on hand but this may simply vanish if farmers take a holiday, switch over to other crops due to the lack of remunerative prices, and a bad monsoon ahead.
The government needs to fix the sugar cane prices realistically and practically and without any further delay.
The domestic sale price in retail market has gone down to Rs28 per kilo but this may go up to Rs32/34 in a kirana shop, which does not benefit the grower! The ex-factory cost varies, from location to location, and the millers are said to be losing upto Rs5.5 per kilo.
The other major issue that has plagued this industry continuously is the non-settlement of dues to farmers by millers, who want the states to adopt the ‘linkage formula’ in line with the Rangarajan Committee's recommendations.
UP sugar mills and many others in different states have already started crushing the sugar cane. The cane farmers co-operatives do not fancy the idea of standing crop and would like to monetize the same, despite outstanding arrears that the mills have to pay.
Millers have demanded that the government introduce the ‘linkage formula’ in line with the recommendations of the Rangarajan Committee, wherein the price of cane is linked to the sugar content.
It may be recalled that the UP Council of Sugarcane Research has estimated the cost of cultivation at Rs23,000 per tonne. The State Advised Price in UP was fixed at Rs280 as against which the Samajwadi Party had assured the farmers, through its manifesto prior to the election, that SAP would be fixed at Rs350. Haryana has fixed Rs310. Fixing a workable price is one thing but just as important is the actual implementation of the rate and ensuring payment of the same. The arrears in UP is said to be Rs2,300 crore, much lower than what it was in the beginning of the year.
In the case of Karnataka, according to the Karnataka State Sugarcane Growers Association President, Kurubur Shantakumar, the arrears to growers stood at Rs2,100 crore and, out of the 65 crushing mills, 54 had not settled the dues as per price fixed by the state.
As a sequel to the writ petition filed by the South Indian Sugar Mills Association (SISMA), the High Court has held that the state government could fix the price of sugar cane and directed the crushing units to pay the arrears within 15 days of the order and this will have to be complied in the next ten days or so. The court upheld the Karnataka Sugarcane (Purchase and Supply Control) Act 2013 and the law empowers government to frame rules to decide sugarcane price on revenue-sharing basis.
In the meantime, it has been reported in the press that as the Brazilian sugar mills have diverted a large chunk of cane for ethanol production, they may expect a fall in production. Upto 60% of the cane is reported to be diverted for ethanol this season.
In so far as India is concerned, export shipments of 1.2 million tonnes have been effected for the period ending September 2014, as per Indian Sugar Mills Association. However, if export subsidy is not given, India may lose its hold in shipping out raw sugar and this unilateral absence, by the world's second largest sugar producer, will enable our competitors like Brazil, Thailand and Australia to boost sales of their sugar to refineries in the Middle East and elsewhere.
So, the sugar industry is at its cross roads. Some urgent steps are of immediate concern, and these need to be addressed, without any further delay:
a) fixing of sugar cane price in relation to sugar content in line with the Rangarajan committee; NDA should not treat this as a ‘UPA’ proposal because we must realise that this committee was set up to resolve the problems faced by the industry. If necessary, make some modifications, if at all this is needed, but implement it nevertheless. After all, it can be corrected should the situation warrant otherwise, at a later stage!
b) direct mills that they should be producing "X" percentage of ethanol mandatorily
c) direct the oil companies to lift this ethanol and blend in line with directives already issued by the Government earlier
So far, all the concerned parties have been playing musical chairs in this industry and are not settling the issues in a firm and fair manner. It is time they did.
Source : moneylife.in
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