Sugarcane dues to be paid by sugar mills to farmers has come down to Rs 15,222 crore as on July 17, 2019, for marketing year 2018-19 (October-September), as a result of various measures taken by the government. For 2017-18 marketing year, cane arrear has also come down to Rs 285 crore. Total cane dues were at Rs 85,179 crore and Rs 85,546 crore during the 2017-18 and 2018-19 marketing years, respectively. Depressed sugar prices due to surplus sugar production in sugar seasons 2017-18 and 2018-19 adversely affected the liquidity of sugar mills resulting in accumulation of cane price arrears of the farmers.
In a bid to improve the liquidity position of sugar mills in the country and enabling them to clear cane price dues of farmers, the government has taken several measures in 2017-18 and 2018-19 marketing years. Among steps taken, the government since June 2018 had fixed a Minimum Selling Price (MSP) of sugar at Rs 29/kg for sale at factory gate in domestic market, below which no sugar mill can sell sugar. MSP has further been increased to Rs 31/kg with effect from February 14, 2019.
The government has extended assistance to sugar mills to offset the cost of cane for the 2017-18 and 2018-19 marketing years and reimbursing carrying cost towards maintenance of buffer stock of 30 lakh tonnes of sugar. The government is also 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 2018-19. Also, the government provides soft loans to sugar mills through banks and bears interest subvention at 7% for one year to clear cane price arrears.
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