Govt expedites subsidy disbursal to sugarcane farmers

- Sugar mills need to submit UCs showing disbursal

- Otherwise, they would be liable to pay interest rate

- Cane commissioners, directors to coordinate with sugar mills

- Under the FRP system, farmers are not required to wait till the end of the season

New Delhi: The Union government has directed cane commissioners and directors of sugar in all States that they expedite the payment of subsidy to farmers.

The money is paid to sugar mills which are supposed to disburse the respective amounts to the farmers from whom they buy sugarcane. The Ministry of Consumer Affairs, Food & Public Distribution has directed the authorities concerned in States that sugar mills should disburse the money to farmers within three months of receiving it from the government, official sources told Bizz Buzz.

On February 18 too, the Ministry had sent a similar instruction to the cane commissioners and sugar directors. For this purpose, sugar mills are stipulated to submit utilization certificates (UCs) which show disbursal. In case the mills don't submit UCs, they would be liable to pay the interest rate as notified by the Central government plus a 2.5 per cent penal interest rate.

The Ministry has asked the cane commissioners and sugar directors to coordinate with sugar mills to ensure the release of funds to farmers.

In October 2009, the concept of statutory minimum price (SMP) of sugarcane was replaced with the fair and remunerative price (FRP) of sugarcane, according to the Ministry. The cane price announced by the Central government is decided on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP) after consulting the state governments and associations of the sugar industry.

The FRP of sugarcane is fixed taking into account the cost of production of sugarcane, return to the growers from alternative crops and the general trend of prices of agricultural commodities, availability of sugar to consumers at a fair price, price at which sugar produced from sugarcane is sold by sugar producers, recovery of sugar from sugarcane, the realization made from sale of byproducts, viz. molasses, bagasse and press mud or their imputed value, and reasonable margins for the growers of sugarcane on account of risk and profits.

Under the FRP system, farmers are not required to wait till the end of the season or for any announcement of the profits by sugar mills or the government. The new system also assures margins on account of profit and risk to farmers, irrespective of the fact whether sugar mills generate profit or not and is not dependent on the performance of any individual sugar mill.

In order to ensure that higher sugar recoveries are adequately rewarded and considering variations amongst sugar mills, the FRP is linked to a basic recovery rate of sugar, with a premium payable to farmers for higher recoveries of sugar from sugarcane.