India’s domestic sugar production at over 31.5 million tonnes in 2017-18 is the highest ever, and the resultant crash in wholesale prices meant mills were unable to pay farmers on time. India, the second largest producer of sugar after Brazil is home to nearly 50 million cane farmers, mostly in UP, Maharashtra and Karnataka. Further, about 500,000 workers are directly employed by sugar mills.
In a move to help sugar mills clear pending payments to sugarcane farmers, the centre is going to announce a ₹8,000 crore package which includes creation of a buffer stock, expanding ethanol production capacity and fixing a minimum sale price for sugar, a government official said.
“The centre is going to bring out a comprehensive package of more than ₹8,000 crore which will include creation of a buffer stock of 3 million tonnes for which the money will be transferred directly to the accounts of the sugarcane farmers,” As per the sources of the Government official.
According to the official, setting up of the buffer stock will cost around ₹1,200 crore which will not only help clear dues to farmers but also ensure regular supply of sugar in the market by maintaining the demand and supply balance.
The latest package comes as dues to sugarcane farmers crossed ₹20,000 crore in the 2017-18 season following a production glut. The move also comes close on the heels of the ruling Bharatiya Janata Party’s defeat in the Kairana Lok Sabha bypolls in Uttar Pradesh last week where dues to farmers were a major issue.
The package will also include a scheme of over ₹4,400 crore for increasing the ethanol capacity which will help in diversion of sugarcane for production of ethanol during the surplus season, the official said.
The official added that the government is also going to fix a minimum price for sale of sugar at around ₹29 per kg which will help clear cane arrears. Simultaneously the centre is also going to put in place a mechanism to ensure that the retail prices of sugar remain under control and sufficient supplies are maintained throughout the year.
