Cheap loans for cane farmers
The Centre has decided to provide loans at 4% to cane farmers through sugar mills.
By ET Bureau |
NEW DELHI: The Centre has decided to provide loans at 4% to cane farmers through sugar mills to help them purchase quality seeds, fertilisers and pesticides in a year when the country���s sugar output is pegged at an abysmal 160 lakh tonnes against a domestic consumption of 230 lakh tonnes, entailing huge imports of both raw and white, or ready-to-eat, sugar.
The loans are expected to incentivise sugarcane farmers to plant more in the 2009-10 year, beginning October. Current estimates have pegged sugar output in the coming year at 130-160 lakh tonnes, impacting market sentiment and pushing retail prices up to over Rs 30 per kg. The soft loan is expected to also increase productivity per acre.
A statement issued on Friday said the loans would be given by the department of food and public distribution from the Sugar Development Fund (SDF) to the applicant sugar factories at an interest rate of 4% p.a. The loans would be disbursed to sugar factories by December 31, 2009. The mills, in turn, would pass on the loans, in cash or kind, to cane growers in their area latest by March 31, 2010, at an interest rate not exceeding 4% p.a.
The government expects sugar factories to repay the loan along with the interest in a total period of 4 years from the date of disbursement, in 4 equal annual installments. Sugar domestic demand peaks in the festive season between August and October and any shortfall can push up prices. The decision is also aimed at benefiting sugarcane growers in Maharashtra, the largest sugar producing state dominated by cooperatives, where assembly polls are to be held in October.
Apart from higher expenses incurred thanks to poor rains this monsoon period, sugarcane farmers are also saddled with unpaid arrears totalling a colossal Rs 1023. 25 crore from sugar mills up to April 30 this year.. For Maharashtra alone, the arrears from mills to farmers totals around Rs 42 crore for all the years.
Despite these heavy dues to farmers, mills have not cleared dues to them, several on the contention that production/processing costs for high priced imports this year, to the tune of four million tonnes in sugar already arrived at Indian ports and that contracted for arrivals, have left them running into nil profit at an ex factory cost of Rs 30/kg.
They have charged the government with keeping sugarcane support (Statutory Minimum Price) depressed for two years compared to other crops such as rice and wheat, disincentivising cane farmers countrywide from covering more acres. In turn, the shortfall in sugarcane has meant that prices for mills per quintal have shot up to between Rs 130-170/qtl. However, the Centre has only announced an SMP of Rs 107+/qtl at 9.5% recovery rate for the 2009-10 crushing.
The loans are expected to incentivise sugarcane farmers to plant more in the 2009-10 year, beginning October. Current estimates have pegged sugar output in the coming year at 130-160 lakh tonnes, impacting market sentiment and pushing retail prices up to over Rs 30 per kg. The soft loan is expected to also increase productivity per acre.
A statement issued on Friday said the loans would be given by the department of food and public distribution from the Sugar Development Fund (SDF) to the applicant sugar factories at an interest rate of 4% p.a. The loans would be disbursed to sugar factories by December 31, 2009. The mills, in turn, would pass on the loans, in cash or kind, to cane growers in their area latest by March 31, 2010, at an interest rate not exceeding 4% p.a.
The government expects sugar factories to repay the loan along with the interest in a total period of 4 years from the date of disbursement, in 4 equal annual installments. Sugar domestic demand peaks in the festive season between August and October and any shortfall can push up prices. The decision is also aimed at benefiting sugarcane growers in Maharashtra, the largest sugar producing state dominated by cooperatives, where assembly polls are to be held in October.
Apart from higher expenses incurred thanks to poor rains this monsoon period, sugarcane farmers are also saddled with unpaid arrears totalling a colossal Rs 1023. 25 crore from sugar mills up to April 30 this year.. For Maharashtra alone, the arrears from mills to farmers totals around Rs 42 crore for all the years.
Despite these heavy dues to farmers, mills have not cleared dues to them, several on the contention that production/processing costs for high priced imports this year, to the tune of four million tonnes in sugar already arrived at Indian ports and that contracted for arrivals, have left them running into nil profit at an ex factory cost of Rs 30/kg.
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They have charged the government with keeping sugarcane support (Statutory Minimum Price) depressed for two years compared to other crops such as rice and wheat, disincentivising cane farmers countrywide from covering more acres. In turn, the shortfall in sugarcane has meant that prices for mills per quintal have shot up to between Rs 130-170/qtl. However, the Centre has only announced an SMP of Rs 107+/qtl at 9.5% recovery rate for the 2009-10 crushing.
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