Export subsidy breathes life into Maharashtra’s sugar industry

The government subsidy to double sugar exports will benefit Maharashtra the most, state sugar industry officials have said.

This comes after the Union Cabinet approved an export subsidy for 60 lakh tonne (6 million tonnes) of sugar at a cost of Rs 6,268 crore and set the payment at Rs 10,448 per metric ton for the sugar season 2019-2020.

Of the total export subsidy, Maharashtra’s share will be about 20 lakh metric ton, or about Rs 2,089.60 crore, according to the Maharashtra State Co-Operative Sugar Factories Federation Ltd., a lobby representing sugar factories. cooperatives.

Maharashtra, the country’s second-largest sugar producer after Uttar Pradesh, produced 107.21 lakh metric tons of sugar between October 2018 and September 2019 and is expected to have a surplus of 58.82 lakh metric tons, the lobby said. sugar.

It was a long-awaited political decision and the need of the hour, said Prakash Naiknavare, managing director of the National Federation of Sugar Cooperatives Ltd. to liquidate some of this unprecedented inventory,” he said, adding that the subsidy is tied to marketing and other expenses and is therefore also WTO compatible. “By the end of September, India will realize the export of 3.8 million tons of sugar and out of this contribution from Maharashtra is a whopping 1.55 million tons.”

As a coastal state, Maharashtra stands to benefit more from this scheme due to its proximity to ports which will reduce internal transport costs, he said, adding that the state has one of the highest inventory levels, at around 5.88 million tonnes. “As soon as the notification is released, millers in Maharashtra must act proactively and make the most of this opportunity.”

The subsidy will be credited directly to the farmers’ account on behalf of the sugar refiners against the cane price levies and the subsequent balance, if any, will be credited to the refinery’s account.

Out of the arrears of Rs 23,207.38 crore to be paid to farmers, Rs 22,645.26 crore has already been paid by millers in Maharashtra. The mills are to pay the balance amount of Rs 589.58 crore, according to the state cooperative.

“We welcome the subsidy announced by the government. This will help us liquidate our excess stock and settle all pending farmers’ dues,” said Sanjay Khatal, Managing Director of the Maharashtra State Co-Operative Sugar Factories Federation. “Maharashtra has no significant FRPs pending (fair and remunerative price) as 98% of FRPs have been paid.”

He said, however, that the state had encountered problems with the repayment of the loans. “Over the past few years, Maharashtra has lost 35% of its market share to Uttar Pradesh. This subsidy is like a short-term “intensive care measure”, Khatal said. “What Maharashtra really needs to revive its sugar industry is to come up with long-term measures.”

The industry body, according to Khatal, has three key state and central government demands for the sugar industry:

  • Loans that were facilitated by the Indian government for FRP payments from 2014 are expected to be cancelled.
  • Other loans taken out by factory owners to operate the factories should be restructured in the long term with a two-year moratorium.
  • For the past two years, factories have been selling sugar with a loss of net cash. The government is therefore expected to make a payment of Rs 4,760 crore as an ex gratia amount at the rate of Rs 500 per ton of crushed cane in 2018-19.

The cost of production is Rs 35 per kg of sugar while the market price is Rs 31 per kg. This means the mills incur a loss of Rs 4 per kg of sugar produced, the cooperative said.

Maharashtra has 195 sugar mills of which 102 are cooperatives and 93 private mills. The six districts that contribute most to sugar production in the state are Kolhapur, Satara, Pune, Ahmednagar and Sholapur.

This grant comes after floods in Kolhapur and Sangali districts caused damage to sugarcane crops. That, combined with ongoing drought in several parts of the state, will lead to a 53% drop in sugar production over the next sugar year, the lobby said.

Rachel J. Bradford