Concerned over the deepening crisis confronting the domestic sugar industry in the face of declining prices and sharply increasing production, the Centre is planning to introduce a uniform national price mechanism for sugarcane by doing away with the present statutory minimum price (SMP) mechanism.
The Union Agriculture Ministry has already asked the Commission for Agricultural Costs and Prices (CACP) to examine an alternative pricing mechanism and come up with its recommendations. The recommendations are expected to be available to the ministry shortly.
The ministry has already convened a meeting of the ministers concerned from the sugarcane growing states on October 3 to consider the CACP recommendations for a concrete policy decision, said ministry sources.
Maharashtra, Uttar Pradesh, Karnataka and Tamil Nadu are the four leading sugarcane growing states in the country.
Existing mechanism
As per existing mechanism, the Centre has been announcing SMP for sugarcane procurement by sugar mills across the country on an annual basis.
But in the wake of falling sugar price over the last two years due to increasing sugar production, the mills have been defaulting on payments to cane farmers.
To redress the plight of the farmers, some states have been giving extra money to farmers through the mills for their supplies.
But increasingly, sugar mills are reluctant to pay even the SMP to farmers owing price crash.
So much so, they are even reluctant to buy the entire sugarcane being supplied by farmers due to a growing demand-supply mismatch on the domestic market front.
International sugar price too has crashed and, therefore, export is not an attractive option.
This has resulted in a tussle between mill owners and farmers as the mill owners’ accumulated dues to the farmers have touched a staggering amount of Rs 4,400 crore.
“As farmers press for payment of their dues in the industry that is in the midst of a deepening crisis, a uniform pricing structure is worth considering and it could benefit everyone,” the sources said.
As a short-term measure to tide over the crisis situation, the ministerial meeting could also consider possibilities of offering more sops to the industry, including permission to directly convert sugarcane juice to ethanol.
A Group of Ministers recently recommended allowing ethanol production from secondary sugarcane juice.
The issue is also likely to be referred to the Cabinet Committee of Economic Affairs for a decision, the sources said.
Production The sugar production is likely to touch a record 29 million tonnes this season that ends this month as against last year’s production of 19.2 million tones.
Industry forecasts are for the sugar price to fall further due to this sharp increase in production as annual domestic consumption has stagnated at around 20 million tonnes.
SOPS IN SIGHT
*Present statutory pricing mechanism to be scrapped
*Alternative pricing mechanism to be adopted
*Nod for converting cane juice directly to ethanol
