Refile: India could pay sugarcane growers direct to help mills -sources

Bannari Amman Sugars

20/10/2015 15:10

(Corrects Modi spelling in paragraph 2) 
    By Mayank Bhardwaj 
    NEW DELHI, Oct 20 (Reuters) - India could for the first time 
pay sugarcane farmers in part for produce sold to debt-laden 
mills, two government sources said on Tuesday, as part of 
efforts to help politically strong growers as well companies 
struggling with a global glut. 
    Prime Minister Narendra Modi's government is encouraging 
mills in the world's No. 2 producer to raise exports to as much 
as 4 million tonnes this marketing year to cut both local stocks 
and cane dues to farmers in big states such as Uttar Pradesh and 
Maharashtra.  urn:newsml:reuters.com:*:nL3N12K2XJ urn:newsml:reuters.com:*:nL3N10G266 
    His government is now considering directly paying farmers 55 
rupees ($0.85) for every tonne of cane produced, while mills 
will come up with about 98 percent of the costs, said one of the 
sources directly involved in the decision-making process. 
    The government would limit such pay-outs to 15 billion 
rupees ($230 million), said the second source. 
    Before Modi's office vets the proposal, the trade and 
finance ministries will discuss the idea, first mooted by the 
food ministry. 
    Food ministry spokesman N.C. Joshi declined to comment. 
    Trade and industry officials expect a confirmation once 
restrictions on announcements that could influence voters end 
post-local elections in the eastern state of Bihar on Nov. 5. 
    Every year the federal government fixes the price that mills 
must pay growers but some key cane growing states, especially 
Uttar Pradesh, raise the price further to satisfy the demands of 
cane growers, a big voting bloc. 
    For the 2015/16 season that began on Oct. 1, the federal 
government fixed the cane price at 230 rupees per 100 kg. Uttar 
Pradesh, which asked mills to pay 280 rupees per 100 kg to 
farmers last year, has not announced this year's price yet. 
    Five straight years of surplus output in India have led to a 
freefall in local sugar prices, hitting the financial health of 
most mills. A sharp rise in cane prices and difficulties in 
exporting into the subdued global market was a double whammy. 
    Sugar prices have fallen more than a fifth while cane prices 
have gone up by more than 50 percent since the 2009/10 season. 
As a result, mills have deferred cane payments that have reached 
as high as 120 billion rupees. 
    But recent hopes of government help have boosted the shares 
of Indian sugar companies such as Bajaj Hindusthan Sugar 
 BJHN.NS , Shree Renuka Sugars  SRES.NS , Simbhaoli Sugars 
 SIMB.NS  and Bannari Amman Sugars  BANN.NS . 
    ($1 = 65.0152 Indian rupees) 
 
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GRAPHIC: Indian sugar exports and production    http://link.reuters.com/cat35w 
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 (Reporting by Mayank Bhardwaj; Editing by Krishna N. Das and 
David Evans) 
 ((mayank.bhardwaj@thomsonreuters.com; +91-11-4178 1019; Reuters 
Messaging: mayank.bhardwaj.thomsonreuters.com@reuters.net)) 
 
Keywords: INDIA SUGAR/