New Delhi: Unfazed by threats of a shut down of sugar mills in Uttar Pradesh, Food Minister Ram Vilas Paswan says that government is ready to deal with any eventualities but is prepared to extend export subsidy and give additional interest-free loans to clear cane arrears.
He made it clear to mill owners that threats are not the right way to solve problems because farmers have other options and they do not have.
Facing payouts of around Rs 4,500 crore as cane arrears to farmers, private millers in UP, the second largest sugar producing state, have threatened to shut operations this year if cane prices are not linked to sugar rates.
"The government is open to extending export subsidy on raw sugar and provide additional interest-free loans to mills to clear cane arrears provided mills give the guarantee, Paswan told PTI in an interview.
He expressed confidence that the stand off between the UP government and the mills over cane price policy would be resolved but criticised the millers' decision for first agreeing to pay higher cane price fixed by the state and later showing their inability to make payment to farmers.
"UP Millers are threatening to shut down operations. Who are they threatening? Are they threatening farmers? Farmers have many options. What options mills have? Farmers can grow other crops like wheat. But sugar mills, set up with crores of rupees of investment, cannot be converted into milk unit," Paswan said.
Stating that there are ups and down in any business, the Minister said that it is "not the right approach" for mills to call for suspension of their crushing operations if they are facing losses. "Do they share profits with the farmers when business is doing well?"
The Minister was also of the view that mills should have not agreed to pay the higher cane price of Rs 280 per quintal for 2013-14 season as fixed by the UP government against Rs 210 per quintal announced by the Centre.
"When the centre fixes Rs 210 per quintal cane price, why mills are ready to pay Rs 280 per quintal price fixed by the state. Mills should have opposed then and there. Firstly, mills agree to pay the price fixed by the state and later you say you won't be able to pay this price," he said.
Asked if the country's sugar production and prices will be affected due to millers' threat to close operations in Uttar Pradesh, Paswan said, "No. We have sufficient stock."
Paswan also said that the Centre will wait and watch what actions the UP government will take to resolve the issue.
"We take threat seriously. The Centre cannot do much. The cane arrears are more in UP. It should be solved between the state government and mills. Let the UP government think how they can solve this issue. The state government can take any action. It can sell mills for clearing cane arrears."
On continuation of export subsidy on raw sugar and providing additional interest-free loan to cash-starved mills, Paswan said, "We are not negative on this issue. We will think on this."
However, the Minister said that these two measures will be announced only if mills guarantee that they use the funds for clearing cane arrears.
Early this year, the UPA government had announced additional interest-free loan of Rs 6,600 crore for mills exclusively to make cane payment. It had also announced export subsidy on raw sugar.
So far, Rs 5,500 crore has been sanctioned to mills, which have not yet submitted a report on whether the money has finally been used for paying cane dues, Paswan added.
It may be recalled that export subsidy were fixed at Rs 3571 per tonne for the period August-September. The subsidy has since ended.
The country's sugar production is estimated at 25 to 25.5 million tonnes in the 2014-15 season (October-September), as against 24.3 million tonnes last year. Domestic demand is around 22-23 million tonnes.
