The Hindu : Finance Ministry favours cut in minimum price for cane

Online edition of India's National Newspaper
Friday, Dec 26, 2003

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Finance Ministry favours cut in minimum price for cane

NEW DELHI DEC. 25. The Union Finance Ministry has favoured slashing of statutory minimum cane price (SMP) to Rs. 64.50 a quintal arguing that any major hike will result in nothing but bail out packages. In an unprecedented scenario, even as the first quarter of the ongoing sugar season is already over, the Government is yet to fix the SMP due to inter-ministerial differences, official sources said here.

Even though the Food Ministry had forwarded the CACP (Commission on Agricultural Costs and Prices) recommendation to raise the cane SMP to Rs. 73 a quintal from Rs. 69.50 a quintal, the former (Food Ministry) too felt that such a major increase was uncalled for at a time when the industry was in a crisis, they told PTI. On the other hand, the Agriculture Ministry strongly favoured that the CACP recommendation be accepted and the cane price be increased in the interest of farmers.

Sources said that the Finance Ministry in fact wanted the SMP to be cut to last year's pre-drought level of Rs. 64.50 a quintal, which had been increased mid-season to Rs. 69.50 a quintal after the devastating calamity. The Finance Ministry's argument was that any disproportionate increase in the SMP would lead to Government intervention to bail out the industry, besides leading to lack of competitiveness with their foreign counterparts.

The inter-ministerial differences have led to a piquant situation with the CCEA approving minimum support prices for rabi crops to be harvested only in April 2004. But it chose to defer the cane SMP. — PTI

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