Food Minister K.V. Thomas on Wednesday asked the sugar industry to diversify its product mix to meet market demand even as he reassured the beleaguered sector that the recently-announced financial package was on its way.
Addressing the 79{+t}{+h} Annual General Meeting of the Indian Sugar Mills Association (ISMA), Thomas said mills should look at producing more refined and raw sugar as well as ethanol as part of product diversification, which could help address their current cash flow and profitability issues.
“The need of the hour is diversification and producing sugar alone will not help,” Thomas said, suggesting that the industry should reduce the cost of production to remain competitive globally.
Reeling under the impact of high cane costs, the sugar industry is facing a payment crisis as glut in production has led to a bearish trend in sugar prices. The industry is currently saddled with arrears of Rs 3,400 crore.
Panel’s outcome The industry’s reluctance to start crushing of cane on time this season due to high cane costs had forced the Government to intervene. An informal group of ministers, led by Agriculture Minister Sharad Pawar, was asked to look into the issue.
The panel suggested extending Rs 7,200 crore in interest-free loans to the crisis-ridden sugar mills to kick-off crushing operations. It also recommended recasting of loans taken by mills in line with the norms laid down by the Reserve Bank of India, incentivise production of four million tonnes of raw sugar and create a buffer stock, besides doubling ethanol blending in petrol to 10 per cent.
Price stabilisation Thomas said his Ministry would soon take a call on the proposed relief measures for the industry. He also said the Government was considering creating a sugar price stabilisation fund to curb volatility in sugar prices.
ISMA Chairman M. Srinivaasan asked the Government to increase the import duty on sugar from 15 per cent to 40 per cent and procure 20 lakh tonnes to create strategic reserve that could be used for the public distribution system. It would help stabilise prices, he said.
Srinivaasan urged the Minister to continue to impress upon the States to adopt the Rangarajan Committee formula of linking sugarcane prices with realisation of the end-product.