The Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi has approved assistance of about Rs. 3,500 crore for sugarcane farmers (Ganna Kisan).

Background

    • Currently, there are close to five crore sugarcane farmers (Ganna Kisan) and their dependents in India.

    • In addition to this, there are about five lakh workers employed in the sugar mills and ancillary activities; and their livelihood depends on the sugar industry.

    • Farmers sell their sugarcane to the sugar mills, however the farmers are not getting their dues from the sugar mill owners as they have surplus sugar stock.

    • The sugar industry is looking to make good of a window of opportunity available after arrivals from Brazil, the world’s biggest sugar producer, ended. The new crop will not hit the market until March, and it will provide Indian exporters an advantage.

    • To address this concern, the Government is facilitating the evacuation of surplus sugar stock.

    • The export incentive will help the industry as the sugar market is expected to be almost balanced during the current season.

Highlights

    • The amount will enable payment of dues of the sugarcane farmers.

    • Government will incur about Rs. 3,500 crores for this purpose, and this assistance would be directly credited into farmers’ accounts on behalf of sugar mills against cane price dues and subsequent balance, if any, would be credited to mill’s account.

    • It aims at covering expenses on marketing costs including handling, upgrading and other processing costs and costs of international and internal transport and freight charges on export of up to 60 LMT of sugar limited to Maximum Admissible Export Quota (MAEQ) allocated to sugar mills for sugar season 2020-21.

    • The idea is to provide Rs 6,000 per tons incentive for sugar exports which will result in resumption of shipments that have come to a standstill since October 1.

    • The incentive, costing Rs 3,500 crore, would help export 60 lakh tons of sugar for the current season ending September next year.

    • Though the incentive was lower than last year, considering that the world sugar prices are higher compared with rates at the same period a year ago, the industry is expected to perform well this season.

    • The incentive approved by the CCEA is against the average Rs 9,750 a tons provided last year for sugar exports. It helped India export a record 57 lakh tons of sugar.

    • India is World's second-largest sugar producer.

    • The incentive gives an opportunity for India to export to its traditional markets such as Indonesia, Malaysia which will help reduce the carryover sugar stocks of 10.7 million tons at the beginning of the season.

    • Even then, the carryover would be reduced to only 9.6 million tons since India’s sugar production is higher this season at 31 million tons.

    • Last season, production was 27.42 million tons.

    • It is expected that 60 lakh tons would give the sugar industry Rs 18,000 crore from exports and subsidy, which will help reduce cane arrears owed to farmers.

    • As on September 11, sugar mills owed growers about Rs 13,000 crore for the crop procured last season.

    • The incentive is required as domestic prices are higher, ranging from Rs 31,000 a tons in Maharashtra to about Rs 32,500 in Uttar Pradesh.

    • The sugar industry received a further boost with the CCEA clearing a budgetary allocation of Rs 5,300 crore towards last year’s incentives. It will help the sugar mills clear the money they owe to farmers.

(The author is a trainer for Civil Services aspirants. The views expressed here are personal.)