Commerce and Railways Minister Piyush Goyal, also handling Food and Consumer Affairs Ministry, told sugar industry that the government will not reduce the fair and remunerative price (FRP) given to farmers for sugarcane.
Instead, the industry should find a way to earn more by being more efficient and diversifying its product portfolio.
Goyal, who addressed the 86th annual general meeting (AGM) of the Indian Sugar Mills Association, said it was not practical to link sugarcane purchase price to sugar price realisation and so it was not possible to reduce the FRP as it was an institutional mechanism going on for many years, much before the Narendra Modi government came to power.
He urged the industry to look at the possibility of increasing the production of ethanol and adding other potential products into the sugar industry’s portfolio.
He said there is no need to stop at 10 per cent blending, it can go up to 20 to 30 per cent adding that Brazil has been blending 70 to 80 per cent ethanol in fuel.
Goyal urged the sugar industry to work closely with transport industry as well as the government to make this happen. Goyal said the government’s decision to give ₹6,000 per tonne export and transport subsidy for exporting 60 lakh tonnes of sugar in the current marketing year 2020-21 (October 2020 to September 2021) will help the industry liquidate surplus sugar stocks.
According to him, sugar output in the current season is expected to be 20 per cent more than that in the previous marketing year.
He said the Centre is in the process of releasing ₹5,361 crore which is due to the industry on account of export subsidy and ethanol payments and the funds will be used mainly to pay the arrears to the sugarcane farmers and the rest of the amount, if any, will be deposited to the accounts of the respective mills.
The minister expressed concern over the sugarcane arrears to farmers, especially in Uttar Pradesh, and asked millers to clear at the earliest.
Goyal also asked the industry to make a holistic assessment to find a sustainable solution, which is workable and make industry efficient as well as profitable with “least stress” on the government’s subsidy. The Minister also appealed to the mills to educate farmers in their command areas about the benefits of the three new farm laws over which farmers from Punjab, Haryana and other States are protesting in Delhi.
ISMA President Vivek Pittie said the mark up above the cost of production for sugarcane is more than 100 per cent and this, together with a high sugar inventory, is putting several sugar companies under financial stress.
He said sugarcane farmers are getting an extra return of nearly 40 per cent as compared to farmers of other crops whose minimum support prices is 50-65 per cent over the cost of production.