Mounting Sugarcane Arrears in India

Keywords : Sugar Industry, Regulation, Cane Arrears


Sugar industry in India has been an example of highly regulated sectors in India. Perishable nature of cane, small farm landholdings and the need to influence domestic prices has made it mandatory for the government to regulate this sector. For a long time after 1931when a Tariff Board was set up the sugar industry in India brought under protection. Almost every aspect of sugar industry has been kept under government control. There was complex system of Licensing, Minimum Distance criteria, Cane Reserved Area, Dual Cane Pricing Mechanism. Levy Sugar Obligation, Regulated Release Mechanism, Regulations Related to Utilization of By-products and EXIM Policy of sugar and a number of these still persist. In such a scenario ex-mill sugar prices have remained stagnant over a long time, whereas the SMP/FRP has increased continuously to support sugarcane growers which in turns made it difficult for sugar mills to clear their cane price dues within reasonable time leading to mounting cane arrears. Efficiency in production, Utilization of by products, Diversification of sugar business and implementation of effective revenue sharing formula for sugarcane pricing as recommended by Rangarajan Committee (2012) would be the key to resolve the problem of mounting cane arrears.


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