New Delhi, July 18 (UNI) The Indian Sugar Mills Association (ISMA) on Wednesday said the hike of Rs 20 per quintal in the fair and remunerative price of sugarcane over last year was ``unaffordable’’ as, according to them, market prices were low and they were unable to clear stocks to pay off farmers.
The Centre has announced a hike in FRP of sugarcane from Rs 255 per quintal last year to Rs 275 per quintal this year linked to a basic recovery of 10 per cent. The government said taking into account the production cost of Rs 155 per quintal, the hike was 77.42 per cent over the production cost to farmers.
The FRP, which is equivalent to the minimum support price, is payable by millers directly to farmers.
Retail sugar prices are around Rs 42 per kilogram, but the industry wants government to take further steps to raise ex-factory price to Rs 35 per kg which is bound to push sugar prices higher in the market.
In a press statement issued here ISMA Director-General Abhilash Verma said, ``the current FRP of Rs 255 per quintal linked to a basic recovery rate of 9.5 percent, is unaffordable at current sugar prices, because of which at the end of June, 2018, cane price arrears are still over Rs 18,000 crore. For the first time, the cane arrears are so high, and the highest ever. This is almost Rs 14000-15000 crore higher as compared to the last two years in June when the cane arrears were between Rs 4500 to Rs 4800 crores. Therefore, the increased FRP for next season (Rs 275 per quintal at 10% recovery ) will be more unaffordable for the sugar mills to pay to the farmers, unless concrete and focused steps are taken to help improve ex-mill sugar prices to at least Rs 35 a kilo. ‘’
ISMA also wants government to take ``strong steps’’ to enable industry to export at least 60 to 70 lakh tonnes of sugar to improve cash flows.
The arrears for this season stand at Rs 18,000 crore. With a view to protect interest of farmers, the government has also decided that there shall not be any deduction in case of mills where recovery is below 9.5 per cent. Such farmers will get Rs. 261.25 per quintal for sugarcane in place of FRP of Rs. 255 per quintal in the current season.
Already the government has extended a bail-out package of Rs 7000 crore to the industry which includes creation of buffer stock of 30 lakh tonnes at the cost of Rs.1200 crore and a major scheme worth more than Rs.4,400 crore for increasing the ethanol capacity in the country for diversion of sugarcane for production of ethanol for timely payment of sugarcane dues of farmers. The government will bear the interest subvention cost of about Rs. 1332 crore for this scheme.
The government also extended allocation of mill-wise Minimum Indicative Export Quota (MIEQ) of 20 lakh tonnes and financial assistance of Rs.5.50 per quintal of cane crushed amounting to about Rs.1500 crore.

The government also decided that the minimum price of sugar will be Rs.29 per kg to help clearance of sugarcane dues of the farmers.
UNI GP SHK 1930