Sharad Pawar's letter to Amit Shah accessed; NCP chief shares sugar sector issues with HM

Two weeks after meeting Prime Minister Narendra Modi, Nationalist Congress Party (NCP) supremo Sharad Pawar on Tuesday met Union Home Minister and Minister of Co-operation Amit Shah. Besides, Sharad Pawar also wrote a letter to Amit Shah, through which he forwarded the concerns of the National Federation of Cooperative Sugar Factories Ltd- the apex federal body representing all the 259 cooperative sugar mills and 9 State cooperative sugar federations across India. 

In the letter, which also had attached a letter by the sugar factories Federation, the problem of India's production being excess of the domestic consumption was addressed. "GOI's efforts to curtail inventory levels by way of encouraging sugar exports and subsuming excess sugar in ethanol are paying dividends, but the sector as a whole and co-operative sugar mills in particular continue to reel under financial stress, which if not contained in time, may explode in the form of mills permanently pulling down shutters & millions of farmers facing unprecedented anxiety and the stress for their survival," the attached letter read. 

Sharad Pawar outlines issues facing sugar sector in letter to Amit Shah

The attached letter outlined two major problems facing the sugar sector. The first issue being the MSP of sugar. Lauding the thew historic decision taken in 2019 to notify sugar MSP and link its revision with sugarcane price (FRP), the Federation pointed out in the letter that in the last 2.5 years, the MSP has not been revised despite a rise in FRP. "The current average production cost of sugar is in the vicinity of Rs 36/kg. The Recommendation of Revenue Sharing Formula by the High Power Committee headed by Dr. C. Rangarajan has been accepted by GOI according to which if 70 percent and 75 percent of revenue is to be paid as cane price, the sugar MSP logically cannot be below Rs. 37.50/kg," it said pointing out that the MSP is still at Rs 31/kg. 

The Federation in the attached letter also sought for the grade-wise pricing system instead of the current uniform MSP to remove the current anomaly and bring about a level playing field.

Coming to the second issue, the Federation in the letter, outlined that the Tripartite Agreement between Ethanol suppliers, OMS's & banks has failed to be a success for Cooperative sugar distilleries, and suggested to permit establishing an índependent Ethanol Manufacturing unit within the premises of the present cooperative sugar mill. "Banks will have a comfort level to enter into TPA with these independent Business Units based on their future estimated revenue on supplying committed ethanol to OMC's who can release payments, in ESCROW account from where banks can collect their loan amount," the Federation said in the letter.  

It further suggested that in order to reduce the bulging sugar inventories, the projects producing Ethanol directly from unsold sugar and projects of mixing 15-20 percent sugar in molasses to produce Ethanol be encouraged. 

Sharad Pawar's letter on meeting with Home Minister by Republic on Scribd