Sugar industry seeks financial restructuring

Vibha Sharma

Tribune News Service

New Delhi, January 30

Reeling under the “worst financial crisis ever” coupled with problem of plenty, the sugar mills’ body, Indian Sugar Mills Association (ISMA), is demanding financial restructuring of the sector. The association wants paddy/wheat-like regulation for the sugar industry. As per the industry, there should be just one support price fixed by the Centre — Fair & Remunerative Price (FRP) — as it is called for sugarcane farmers.

The states, if they want to further incentivise the farmers, should pass on extra benefits (higher-than-FRP) through their own budget, it said today, pleading for financial assistance from the Centre.

“We are unable to pay anything extra because of mounting arrears and crashing sugar prices. Ex-mill sugar prices are at its lowest in the past three years and the mills across the country are struggling to pay even the FRP,” ISMA president A. Vellayan said.

The surplus sugar stocks further add to the industry’s woes. Though opening up of exports is a short-term measure, the industry demands permanent solution — a structural review of the way FRP and the SAP are fixed.

Due to high sugarcane price fixed by the government, the cost of sugar production in India is among the highest in the world, making Indian sugar uncompetitive in the international market.

According to the association, cane price arrears in last sugar season in March-April 2014 crossed Rs 13,000 crore and with current season’s sugarcane prices either at the same level or higher and ex-mill sugar prices being substantially lower than what was in last year, it is feared that cane price arrears will be higher than last season if the situation is not rectified.

The industry says that India is producing surplus sugar continuously for the past five seasons. During the current sugar season also, the industry will produce more than what is required domestically.