Lok Sabha Question No. 4589 (UNSTARRED), answered on 2019-01-08
Subject: Loans to Sugar Industry
Ministry: CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION
Asked by: M. B. RAJESH

## GOVERNMENT OF INDIA

## MINISTRY OF CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION

## DEPARTMENT OF FOOD AND PUBLIC DISTRIBUTION

## LOK SABHA

## UNSTARRED QUESTION NO. 4589

## TO BE ANSWERED ON 08 JANUARY, 2019 LOANS TO SUGAR INDUSTRY

## 4589.   SHRI M.B. RAJESH:

Will the Minister of CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION miHkksDrk ekeys] [kk| vkSj lkoZtfud forj.k ea=h be pleased to state:

- (a) the  total  amount  of  interest  free  loans  made  available  to  sugar industry in the current financial year;
- (b) the interest free loans given to sugar industry in the last two financial years;
- (c) whether  the  Government  has  estimated  the  amount  due  to  cane farmers, if so, the details thereof;
- (d) the steps taken by the Government to ensure that sugar mills clear
- their dues to cane farmers; and
- (e) whether  the  Government  will  initiate  action  against  sugar  mills  for not  clearing  dues  despite  availing  interest  free  loans,  if  so,  the  details thereof?

## A N S W E R

MINISTER OF STATE FOR  CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION (SHRI C. R. CHAUDHARY)

- (a) & (b): No interest free loan has been made available to sugar industry either in the current financial year or in the last two financial years.
- (c): Payment of dues to the sugarcane farmers is a statutory obligation on sugar  mills  under  the  provisions  of  the  Sugarcane  (Control)  Order,  1966. However,  payment  of  cane  price  dues  of  farmers  by  sugar  mills  is  a continuous process. Low realization from sale of sugar due to surplus sugar production leads to accumulation of cane price arrears during previous sugar season 2017-18, which peaked at Rs. 14538 crore on the basis of Fair and Remunerative Price (FRP) and Rs. 23232 crore on the basis of State Advised Price (SAP) in the last week of May, 2018. As a result of various measures taken by the Government, the cane price arrears for the sugar season 201718 have come down to Rs. 953 crore and Rs.3251 crore on FRP and SAP basis respectively as on 02.01.2019. Further an amount of RS.2075crore is pending against previous sugar season.

(d): Sugar production in the previous sugar season was about 322 LMT which is much higher than the consumption of 255 LMT. The excess sugar production in the previous season and estimation of similar production in the current sugar season 2018-19 has adversely affected market sentiments, due to  which  the  ex-mill  prices  of  sugar  in  the  domestic  market  have  fallen sharply  and  came  down  in  the  range  of  Rs.  24.50  to  Rs.  26  per  kg  in  the month of May, 2018. Low realization from sale of sugar due to surplus sugar stock has adversely affected the liquidity position of sugar mills. With a view to improve the liquidity position of sugar mills enabling them to clear cane price arrears of farmers, the Government has taken the following measures during last few months:

- (i) In order to prevent cash loss and to facilitate sugar mills to clear cane dues of  farmers  in  time,  the  Government  has  fixed  a  minimum  selling  price  of sugar at Rs.29/kg for sale at factory gate in domestic market, below which no sugar mill can sell sugar.
- (ii) Extending  Assistance  to  sugar  mills  @Rs.5.50/quintal  of  cane  crushed  for sugar season 2017-18 to offset the cost of cane amounting to about RS.1540 crore;
- (iii) Created buffer stock of 30 LMT  in sugar season  2017-18 for  which Government will reimburse carrying cost of Rs.1175 crore towards maintenance of buffer stock;
- (iv) Extending soft loans of Rs. 6139 crore through banks to the mills for setting up new distilleries and installation of incineration boilers to augment ethanol production  capacity  for  which  Government  will  bear  interest  subvention  of Rs. 1332 crore;
- (v) Extending  Assistance  to  sugar  mills  @Rs.13.88/quintal  of  cane  crushed  for sugar season 2018-19 to offset the cost of cane amounting to about Rs.4163 crore;
- (vi) Extending  Assistance  to  sugar  mills  for  defraying  expenditure  towards internal transport, freight, handling and other charges to facilitate export of sugar from the country in sugar season 2018-19 amounting to about Rs. 1375 crore.
- (vii)   Government has also notified new National Policy on Bio-Fuels, 2018 under which sugarcane juice has been allowed for production of ethanol. Further, the  Government  has  fixed  remunerative  price  of  ethanol  produced  from  CHeavy molasses and B-Heavy molasses/sugarcane juice separately for supply under EBP during ethanol season 2018-19.

As stated in reply of part (a) no interest free loans have been given to sugar mills so the question of linking such loans with cane price arrears does not arise. However, the Sugarcane (Control) Order,1966 stipulates payment of cane price within 14 days of supply, failing which interest at the rate of 15%  per  annum  on  amount  due  for  the  delayed  period  beyond  14  days  is payable.  The  powers  for  enforcing  this  provision  are  delegated  and  vested with  the  State  Governments/UT  Administrations  who  have  necessary  field formations for implementation of the said provision.

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