No end to farmer woes as dip in sugar sales triggers cash crunch

The fall in sugar sales following nationwide lockdown to control coronavirus has precipitated a cash crisis in the sugar industry, for which the farmers working in sugar mills are facing harrowing time as their dues are yet to be cleared by the government.

According to the Indian Sugar Mills Association (ISMA), the arrears have mounted to Rs 18,000 crore.

Avinash Verma, Director General, ISMA, said: "Sugar comes in the essential commodities category, so there has been no major impact on the sugar industry, but due to lack of demand from big buyers, sugar sales have dropped significantly."

ISMA report claims that sugar sales in March and April declined by 10 lakh tonne.

Asked about the impact of the nationwide lockdown on the sugar industry, Verma told IANS: "Being an essential commodity, it helped to continue the production and sales of sugar, so there is no major impact on the sugar industry. But due to weak demand, problems have cfopped up due to cash crisis."

Even before the global pandemic hit the country, the Centre imposed a complete lockdown since March 25, due to which all the food shops including hotels and restaurants were closed. In such a situation, big buyers of sugar such as confectioners, bakery manufacturers and refrigerant companies have been missing.

Varma said, "In the last one-and-a-half months, we have had problems selling sugar. These problems have come because the demand for big buyers of sugar like cold drink, ice cream, cake, bakery, juice producers has declined".

He said that cash inflow was affected due to minimal demand, while sugar mills operating in some areas of the country, especially in north India, are in need of cash as they are unable to pay the cane price to the farmers.

Varma said, "The liquidity problem was created due to the decrease in sugar sales. At the same time, the second problem was due to reduced demand for petrol as the OMC (oil marketing companies) began to slash the purchase of ethanol as there was no space to keep it in their depots. Then we urged the OMC to make arrangements to keep it in the states where ethanol is being procured.

"Initially we had problems for 10-15 days, but when the ethanol was re-allocated, this problem was resolved. However, in supplying the ethanol to other states, we have to spend some of our money because OMCs for remote areas do not give us full transportation expenses. "

Verma said, "Some of the subsidies announced by the government like buffer subsidy, export subsidy, interest subvention on soft loan are some of the dues we have demanded to be paid so that these problems can be resolved."

"We have urged the government that in the last two years, if you have committed to give about Rs 12,000 crore, then arrange it. In the Budget, the government has made a provision of Rs 4,000 crore for this. We have asked the government to increase it further by Rs 8,000 crore. "

He said that apart from this, the industry has demanded extending the repayment period of the loan by one year. The sugar industry has demanded the government not to increase the remunerative price of sugarcane for the next year.

On the question about sugar exports, the ISMA Director said ndia has exported around 1.5 lakh tonnes of sugar even during the lockdown.

"Demand for sugar is coming from Indonesia and Iran at this time", he added.

He said that about 3.5 million tonne of sugar has been exported in the current season.

Varma said that the industry estimates that up to 4.5 million tonnes of sugar can be exported in the current season.

According to the latest figures released by ISMA, the sugar production in the country till April 30 in the current sugarcane crushing season has been 258.01 lakh tonnes, which is 63.70 lakh tonnes i.e. 19.80% lower than the same seven-month production figures of 321.71 lakh tonne last year.