Government’s decision to give Rs. 4.50 per quintal of sugarcane crushed in 2015-16

The sugar industry welcomes Government’s decision to give Rs. 4.50 per quintal of sugarcane crushed in 2015-16 SS. As per estimated cane crushing during 2015-16 sugar season, it will work out to around Rs. 1100 crore.

This decision is significant as it means that the Government is no longer shying away from owning up the FRP it fixes for sugarcane, by directly contributing for a part of the cane price, instead of continuously burdening the millers. It will reduce industry’s liabilities towards cane to that extent, reducing a part of its losses.

This concept of the Government to bridge the gap, at least partially, between what the sugar mills cane pay to farmers as per their revenue realization, and what the Government wants to give to farmers, will help to reduce cane price arrears. However, at current low sugar prices, the losses will be more than Rs. 1100 crore and, therefore, if sugar prices do not improve to cover costs during the season, the industry and farmers may seek further help from the Government’s budget.