India 2018

280 India 2018
Under the FRP system, the 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. Accordingly, FRP for 2017-18 sugar
season has been fixed at ` 255 per qtl. linked to a basic recovery of 9.5 per
cent subject to a premium of ` 2.68 per qtl. for every 0.1 per centage point
increase above that level.
De-regulation of Sugar Sector
2013-14 was a water-shed for the sugar industry. The central government
considered the recommendations of the committee headed by Dr. C.
Rangarajan on deregulation of sugar sector and decided to discontinue the
system of levy obligations on mills for sugar produced after September, 2012
and abolished the regulated release mechanism on open market sale of
sugar. The deregulation of the sugar sector was undertaken to improve the
financial health of sugar mills, enhance cash flows, reduce inventory costs
and also result in timely payments of cane price to sugarcane farmers. The
recommendations of the committee relating to cane area reservation, minimum
distance criteria and adoption of the cane price formula have been left to
state governments for adoption and implementation, as considered
appropriate by them.
Ethanol Blending Petrol Programme
Ethanol is an agro-based product, mainly produced from a by-product of the
sugar industry, namely molasses. In years of surplus production of sugarcane,
when prices are depressed, the sugar industry is unable to make timely
payment of cane price to farmers. The ethanol Blended Petrol Programme
(EBP) seeks to achieve blending of Ethanol with motor sprit with a view to
reducing pollution, conserve foreign exchange and increase value addition
in the sugar industry enabling them to clear cane price arrears of farmers.
The central government has scaled up blending targets from 5 to 10 per
cent under the EBP. The procedure of procurement of ethanol under the EBP
has been simplified to streamline the entire ethanol supply chain and
remunerative ex-depot price of ethanol has been fixed. To facilitate achieving
of new blending targets, a "grid" which networks distilleries to OMC depots
and details quantities to be supplied has been worked out.
Scheme for Extending Financial Assistance to Sugar Undertakings
The government in 2014 notified a scheme for Extending Financial Assistance
to Sugar Undertakings (SEFASU-2014) envisaging interest free loans by bank