Former Union agriculture minister Sharad Pawar on Tuesday asked sugar mills to diversify into other products like ethanol and CNG to deal with surplus production of sweetener as well as modernise their manufacturing plants.
He also urged sugar mills to improve the system of marketing and reduce manufacturing costs to bring efficiency in their businesses.
Pawar, who is also the chief of the Nationalist Congress Party (NCP), welcomed the relief given by the Centre to cooperative sugar mills for last five years starting 2016-17 season on the issue of Income Tax notices issued to millers for making payment over and above the price fixed by the Centre. But, he also said there was a need for similar relief from 1992-93 onwards.
Addressing an award function organised by the National Federation of Co-operative Sugar Factories Ltd (NFCSF), Pawar said that more than 40 efficiency awards were given to sugar mills of various states.
In cultivation of sugarcane crop, Pawar said the country’s farmers have achieved record production and added that the area under coverage for sugarcane has reached 55 lakh hectares while the per hectare yield has reached 85 per tonne and sugar recovery was at around 11 per cent.
“This has resulted in an increase in production. Production has increased to over 300 lakh tonnes while the domestic requirement is 260-262 lakh tonnes. So, there could be a problem in tackling this excess production of sugar,” Pawar observed.
He also pointed out that sugar mills face liquidity issue because of surplus production and this ultimately impacts sugarcane farmers.
Lower production of sugar in other major producing nations like Brazil, opened up new markets for India this year to export its surplus production, he added.
To deal with excess sugar, Pawar said mills need to diversify their product portfolio and go for value addition.
Apart from ethanol, he said there is a need to consider diversification into new products like CNG, CBG (bio gas) and green hydrogen.
“My second suggestion is how to modernise the production system. We should try to bring new technologies in process and engineering for the benefits of sugar sector and cane farmers,” Pawar said.
He also stressed on reforms in marketing of sugar by branding and improving marketing as this could improve financial position of millers.
Pawar asked mills to focus on reducing their production cost by adopting strict cost control measures. “There is a need to give more attention on cost cutting”.
Noting that sugarcane farmers are the main pillar of the sugar sector, the NCP supremo said there should be a constant dialogue with farmers and that mills should always think about protecting the interest of farmers.
“If the situation of farmers improve, the conditions of mills will improve,” he said and exhorted mills to help boost farmers’ income.
Referring to the Income Tax notices for co-operative sugar mills on higher payment to farmers over and above the central price called FRP, Pawar said the Centre has given relief for five years starting from 2016-17 marketing year (October-September).
However, he said sugar factories have got recovery notices from 1992-93 onwards and added that there was a need to provide relief for the remaining 24 years as well to sugar mills and farmers.
Stating that mills are not in a position to pay additional income tax, Pawar asked sugar mills to hold discussion with the central government on this issue and find solutions.
Recently, the Centre clarified that sugar mills will not be subjected to income tax on the payment made to farmers over and above the Fair and Remunerative Price (FRP) post 2016.
NFCSF MD Prakash Naiknavare demanded that the Centre should amend the finance bill in the upcoming Parliament session to provide relief to the cooperative mills.
He said recovery notices of around Rs 1,000 crore have been issued to co-operative mills, mostly of Maharashtra, Karnataka and Gujarat.
Naiknavare also said the mills have already made payment to farmers and cannot recover from them.
Pawar also highlighted that there has been significant improvement in the sugar sector.
Citing the example of Uttar Pradesh, he said the recovery rate of sugar from sugarcane has increased to 11 per cent from 6-8 per cent. Research institutes are developing new varieties for the benefit of sugarcane farmers.
Pawar talked about the staggered payment system of three instalments adopted by Gujarat mills for procurement of sugarcane farmers.
He said mills cannot sell the entire stock in the market immediately after manufacturing of sugar and therefore they face problems in making 100 per cent payment to cane farmers.
“They don’t have any option left but to take loans from banks,” he said, adding that this ultimately impacts cane farmers.
He urged all stakeholders to think how maximum benefit can be provided to farmers by undertaking reforms.
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