Maharashtra’s estimates for sugar production this season seem to have gone awry. While the initial estimates were 650 lakh tonne of cane to be crushed to produce some 72 lakh tonne of sugar, the state has already crossed 779 lakh tonne of cane crushing to produce 87 lakh tonne of sugar and is expected to crush more, an excess of some 30 lakh tonne of sugar. Staring at a bumper production this season and with good crop expected the next season as well, sugar millers in the state are now saddled with the problem of plenty. Millers are now seeking a minimum support price (MSP) for sugar.
Not only are the millers seeking government intervention to stop the further downslide in prices but also want removal of the export duty to be able to export sugar to international markets. According to Harshavardhan Patil, a senior member of the Maharashtra State Cooperative Sugar Factories Federation (MSCSFF), sugar prices for the season of 2017-18 had dropped to a low of `2,850 per quintal after which the government had increased import duties to 100% from 50% and stock limit restrictions were announced.
While this temporarily stopped the downslide in prices, the rates have begun reducing again, he said, adding that sugar prices are currently in the range of Rs 3,000 per quintal to `3,050 per quintal. The government should therefore plan for a buffer stock of 25-30 lakh tonne of sugar, he said.
More importantly, the government should declare a Minimum Support Price (MSP) of Rs 3,200 per quintal for the season of 2017-18. “The sugar sector is in deep trouble with rising production costs, increasing Fair and Remunerative Price (FRP) rates which has increased the burden of cane payments to farmers, the downslide in sugar prices. The government therefore can decide the MSP taking these factors into account as sugar also comes under essential commodities,” he said.
The government has also imposed a 20% duty in sugar export which should be scrapped taking sugar production into account.Exports should be permitted under the Open General Licence (OGL) account, senior officials of the federation said. For 2017-18, sugar production is likely to touch 290 lakh tonne and the carryover stock from the previous season is 42 lakh tonne.
The country’s consumption is about 245 lakh tonne with a carryover of some 87 lakh tonne. Patil pointed out that cane availability is likely to be good in 2018-19 and thus the government should incentivise exports and allocate export quotas so that domestic rates stabilise at Rs 3,250 per quintal to Rs 3,300 per quintal.
According to Sanjay Khatal, MD of the federation, the Income Tax Department has sent notices to sugar mills for paying higher rates above FRP even as sugar millers are finding it difficult to make cane payments in light of dropping sugar prices.
” The case has been pending in court since 1995. The Bombay High Court has ruled in favour of mills. The Income Tax Department has filed an appeal in Supreme Court and the case is now being heard by the larger bench. It is therefore improper for the Department to issue tax notices when the case is still being heard,” he said.
Moreover the Maharashtra State Cooperative Bank ( MSCB) has changed sugar valuations some 6 times this season leaving very little money in hands of millers for cane payments and mills also face threats from farmer organisations about possible agitations if the cane payments are not made in time, senior officials said. Millers should be granted concessions to make cane payments as per the 80:20 formula, officials said. Significantly the Government of Maharashtra announced that it would purchase 10 lakh tonne of sugar at the rate of Rs 3200 per quintal after a sharp fall in prices. Federation members said that the government should fulfill its promise.