Financial Daily from THE HINDU group of publications
Friday, Dec 20, 2002
Financial Daily from THE HINDU group of publications Friday, Dec 20, 2002 |
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Agri-Biz & Commodities
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Agricultural Policy Rs 5/qtl hike in sugar SMP Our Bureau
NEW DELHI, Dec. 19 AFTER announcing a Rs 2,000-crore plus interest waiver package for farmers on Wednesday, the Prime Minister, Mr Atal Bihari Vajpayee, on Thursday offered yet another sop— this time to sugarcane growers. Farmers have been granted a Rs 5 per quintal increase in the statutory minimum price (SMP) for the cane they supply to factories. The increase— which is an ad hoc drought relief measure— will be across-the-board and apply to factories all over the country. Further, it will not be linked to sugar recovery levels. Thus, all factories— whether in Uttar Pradesh or Tamil Nadu— will have to pay the flat Rs five per quintal extra SMP. This is irrrespective of their sugar recovery being 10 per cent or 12 per cent. This is unlike the normal SMP formula, where the base price of Rs 64.50 per quintal fixed for the current 2002-03 crushing season (October-September) is linked to a basic sugar recovery of 8.5 per cent. For this, factories having to shell out a premium of Rs 0.76 per quintal payable on every 0.1 per centage point increase over this level. Assuming that total quantity of 170 million tonnes is crushed in the season, the extra Rs 5 per quintal would translate into an additional burden of around Rs 850 crore for the industry. And as a concession to mills, the Prime Minister has announced that the Centre would `effectively implement' the monthly release mechanism regulating sale of sugar in the open market. This is expected to keep sugar prices firm and allow mills to pay the extra drought relief-linked cane price amount. The Government has already made changes to the release mechanism reverting to the monthly quota from its earlier decision of a quarterly release.
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