On Wednesday, during the current marketing year 2020-21, the government approved a subsidy of Rs 3,500 crore to sugar mills for the export of 60 lakh tonnes of sweetener as part of its efforts to help them clear outstanding debts to sugarcane growers.
Briefing media After the meeting, Minister of Information and Broadcasting Prakash Javadekar claimed that the Cabinet Committee on Economic Affairs (CCEA) had approved a subsidy of Rs 3 500 crores for exports of 60 lakh tons of sweetener and that the balance of the subsidy would be directly granted to farmers.
The CCEA approved the subsidy for the current year at a cost of Rs 6 per kg, much lower than approximately Rs 10.50 per kg in the 2019-20 marketing year, bearing in mind favorable foreign markets.
Because of strong domestic demand over the past two-three years, Javadekar said both “sugar industry as well as sugarcane farmers are in crisis” Output is also projected to be 310 lakh tonnes this year as compared to the annual production of 260 lakh tonnes.
Five crore farmers and five lakh employees working in sugar mills and associated ancillary operations will profit from the announcement. Sugar mills will be able to receive Rs 18,000 crore from export sales, said Javadekar, who is also Minister of the Environment of the Union.
The Food Ministry claimed in a separate statement that farmers sell their sugar cane to sugar mills, but farmers do not earn their dues from sugar mill owners because they have surplus sugar stock.
“To address this concern, the government is facilitating the evacuation of surplus sugar stock. This will enable payment of dues of the sugarcane farmers. The government will incur about Rs 3,500 crore for this purpose,” it said.
And this aid, on behalf of sugar mills, would be attributed directly to farmers’ accounts against cane price dues, and resulting balance, if any would be credited to the mill’s account, it added.
The subsidy is intended to cover marketing expenses, including handling, upgrading, and other production costs, and international and internal shipping costs and freight charges for exports of up to 60 lakh tonnes of sugar, restricted to the Maximum Admissible Export Quota (MAEQ) allotted to sugar mills for the 2020-21 sugar season.
According to official reports, Mills exported 5.7 million tonnes of sugar against the compulsory quota of 6 million tonnes set for the 2019-20 season (October-September).
Over the past two years, India, the second-largest sugar production country in the world, has had to give export incentives to decrease surplus stocks and help cash-starved sugar mills make direct cane payments to farmers.
Food Secretary Sudhanshu Pandey said last month that the government is reconsidering the extension of export subsidies for sugar as India has a fair chance of exporting the sweetener on the international market.
“Thailand’s production is expected to be down this year while Brazil’s crushing will only start in April 2021. From now till April, there is a good export opportunity for India,” the secretary said.
“This is the opportunity the industry has to encash upon, we are doing our best given that India is expected to have a bumper sugar production this year,” he said.