Record sugar output, worse situation for Maharashtra farmers

MUMBAI: It’s known as the land of politically powerful sugar barons and has long been the leading producer of sugarcane in the country. But this year, Maharashtra has turned out the highest sugar output ever in its 55-year history. By May, it’s expecting an output of a record 103 lakh tons—34% more than in 2014.

But the glut is not good news. Sugar prices have crashed by Rs 700 per quintal and factories have not been able to pay cane farmers their dues. The arrears to cane farmers are estimated to hit a steep Rs 4,500 crore by the end of the season.

State cooperatives minister Chandrakant Patil is expected to meet Union food minister Ram Vilas Paswan on Thursday to discuss a bailout for the sector. “We will ask the Centre to take a buffer stock of sugar from Maharashtra, reschedule loans from the sugar sector and extend fresh loans,” said state cooperatives secretary S K Sharma.

The main reason for the surplus is that farmers grew an additional 1.17 lakh hectares of cane after a plentiful harvest in 2014. Nearly 20% of the cane produced came from the single district of Solapur in the sugar bowl of western Maharashtra. While this region produced the bulk of the cane, even arid Marathwada turned out 20% of the output.

The industry says it’s caught in a bind. While sugar prices are market driven, factories pay government-set prices for buying cane from farmers. Sugar factories received 910 lakh tons of cane this year, 34% more than 2014. The surplus led to sugar prices plummeting from Rs 2,800 to Rs 2,100 a quintal. On the other hand, the price for the purchase of cane was set by the Central government at an average of Rs 2,200 a ton.

To make matters worse, the drop in crude oil prices has led to sugar from Brazil flooding the international market. This has made sugar exports from India more difficult.

So far the state has announced a loan of Rs 2,000 crore to help bridge the gap between the sugar prices and the rate of purchase from farmers. It has also waived purchase taxes worth Rs 750 crores on cane. And added a subsidy of Rs 1,000 per tonne for the export of raw sugar to the Rs 4,000 already announced by the Centre.

The sugar lobby says 80% of the state’s factories will face losses without a bailout. “Import duties should be raised to 40% from 25% to protect the domestic market. And an incentive of at least Rs 850 per ton of should be given to help us pay farmers their dues,” says Sanjeev Babar from the Maharashtra Federation of Cooperative Sugar Factories.

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