Mumbai
Updated : Dec 20, 2014, 05:30 AM IST
The falling price of crude oil is worrying sugarcane farmers in the state, who are already reeling under drought. They fear this may eventually lead to cheaper Brazilian sugar being imported, making their life more miserable.
With fall in crude prices, Brazil, the largest sugar and ethanol producer in the world, is producing more sugar than ethanol, a fuel produced from sugarcane, which is now costlier than crude oil. This, Indian farmers feel, would adversely affect sugar export.
Samit Kadam, a farmer from Sangli, told dna: “This may eventually lead to import of Brazilian sugar into India. With sugar prices in India dropping drastically due to surplus production, sugar mill owners are offering farmers for cane only Rs1,700-1,900 per tonne as against fair remuneration price (FRP) of Rs2,200.”
FRP is the minimum guaranteed price for 9.5% sugar recovery rate which is linked to basic sugar recovery rate, and is fixed by the Centre after taking into account the margin for sugarcane farmers (based on cost of production and transportation). It doesn't take sugar price into account.
Kadam, youth wing president of Jan Surajya Shakti (party) in Sangli, said: “Sugarcane is perishable; farmers can’t keep it in the field for longer period. Hence they sell it in order to clear their bills (electricity, fertilizer, etc). It's high time the Centre took some emergency measures.”
Ajit Jhalke, a senior journalist who specialises in agricultural issues, said: “While farmers are suffering, influential sugar mill owners resist hiking cane price as that would raise their input costs. This issue is affecting farmers across India, and Centre's urgent attention is needed.”
Indian Sugar Mills Association (ISMA) blames it on falling sugar prices, excess production and banks tightening lending, forcing millers to sell at cheaper rates for generating cash-flow. “With sugar prices on a slide, it is not possible to pay FRP,” said an ISMA official.
The rate of sugar in international market is around Rs22,000 per tonne and in India it's about Rs24,500.
This year in the country, sugar production touched 255 lakh tonne, a 15 lakh increase from last year; the demand is around 240 lakh tonnes. There is a stock of 60 lakh tonne, which means an aggregate surplus of 75 lakh tonne.
To use up the surplus, millers now want financial incentives for producing ethanol and setting up infrastructure for 10% ethanol blend in petrol.
Vinay Kore, president, Warna sugar mills, said: “Government must make sure sugar is not imported. Hike import duty from 25% to 40%, and there should be subsidy for exporting raw sugar before prices fall further. Two years' buffer stock for PDS, and incentive to set up ethanol plants can help save the industry.”
Union food secretary Sudhir Kumar could not be contacted.
An official in food and civil supplies ministry said: “The Centre is evaluating a proposal to extend subsidy for exports of raw sugar in 2014-15 marketing year.”
Fair Remuneration Price
FRP is linked to basic sugar recovery rate of 9.5%, subject to a premium of Rs 1.46 for every 0.1 percentage point increase in recovery above 9.5 per cent. Recovery rate is the quantity of sugar produced from crushed cane.