Sugar mills seek export subsidies, debt restructuring
Sugar prices at mill gates are the lowest in the past three years
New Delhi: With sugar prices touching record lows, mills want the central government to come to their aid by restructuring debts and offering export sops.
Sugar prices at mill gates are the lowest in the past three years and mills across the country are unable to pay the fair and remunerative price (FRP) announced by the centre, the Indian Sugar Mills Association (Isma) said on Friday. In addition, mills are unable to repay bank loans.
The debt burden of the sugar industry has more than tripled in the past five years, from ₹ 11,443 crore in 2007-08 to ₹ 36,601 crore in 2012-13. What’s more, the industry fears that dues to sugarcane farmers in the current crushing season might surpass last year’s peak dues of ₹ 13,000 crore.
The all-India cane price arrears has touched ₹ 11,000 crore by end of January. This might trigger yet another bout of farmer suicides in major cane growing states such as Uttar Pradesh. Last year, several cases of farmer suicides were reported from the state.
“The financial situation is so bad that earnings of the industry is barely enough to cover the interest cost of the companies. The debt burden needs to be restructured, including moratorium of at least 3-5 years and reschedulement of repayment as well as reduction in the interest burden of the mills," Isma said in a statement.
In addition, Isma wants export subsidies on at least 2.5 million tonnes on raw sugar.
Sugar supply has been exceeding demand for the past five years, leading to a build-up of stocks that will continue this year as well. The opening balance in 2015-16 sugar season may go up from this year’s stocks of 7.5 million tonnes, unless some of the surplus could be exported, Isma said. Since leading sugar producers such as Brazil, the European Union, Thailand, Australlia, Russia and China are producing surpluses, global prices are at their lowest in the past few years.
Since surplus sugar production is a direct result of surplus sugarcane grown by farmers, the industry wants the government to come to its aid. Government regulation presently mandates that all sugarcane offered to mills for sale by farmers have to be compulsorily crushed by them.
Local mills are expected to produce 26 million tonnes of sugar this year, compared with domestic demand between 24.7 to 24.8 million tonnes.
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