New Delhi: The National Federation of Cooperative Sugar Factories (NFCSF) warned of deepening financial distress across India’s cooperative sugar mills, demanding comprehensive One Time Settlement (OTS) scheme overhaul under Sugar Development Fund (SDF) to avert widespread defaults and cane arrears crisis.
50% Interest Waiver Critical for Viability
Delegation led by Harshvardhan Patil met Cooperation Secretary Ashish Kumar Bhutani, proposing 50% waiver on normal + penal interest crippling OTS participation. Current framework’s high debt burden deters mills despite desperate liquidity needs.
Ex-mill sugar averages ₹3,850/quintal against ₹4,100 production costs—₹250 shortfall forces continuous losses. Rising sugarcane procurement, static realizations, mounting farmer dues create perfect storm threatening 2025-26 season viability.
Supply Stable Despite Mill Distress
281 lakh tonnes production (post 28 lakh tonne ethanol diversion) + 50 lakh tonnes opening stock yields 331 lakh tonnes availability. Domestic consumption (280 lakh tonnes) + 10 lakh tonnes exports leaves 41 lakh tonnes closing stocks—lowest since 2016-17 but adequate.
Procurement cost-revenue mismatch delays payments to 5 crore sugarcane growers across Maharashtra, UP, Karnataka, Tamil Nadu. NFCSF warns default cascade risks rural economies supplying 40% agricultural GDP.
OTS Scheme Structural Flaws Exposed
High interest component discourages participation despite desperate debt restructuring needs. Mills require concessional settlement enabling operational revival versus perpetual default trajectory eroding SDF corpus recovery potential.
Timely policy recalibration essential preventing cooperative sector collapse mirroring 2018-19 payment crisis. Fair and Remunerative Price (FRP) hikes inadequate absent market realization alignment protecting mill viability.
28 lakh tonnes blending mandate provides temporary relief but cannot offset structural pricing deficiencies. Export quotas (10 lakh tonnes) yield marginal forex gains insufficient against domestic cost pressures.
Three-Pronged Relief Strategy Demanded
- OTS Interest Waiver: 50% reduction unlocking settlements
- MSP Guarantee: Statutory minimum support price enforcement
- Buffer Stock Release: Inventory management easing realizations
Rural Economy Domino Risk
Sugar sector employs 5 crore farmers, supports 50 lakh mill workers. Payment delays cascade through village economies dependent on cane payments funding education, healthcare, agricultural inputs.
Crushing season approaches demanding immediate intervention. NFCSF warns sustained losses force closures threatening 2026-27 season planting decisions impacting national sugar security trajectory.
Interest waivers insufficient absent FRP-market price convergence, export competitiveness restoration, ethanol pricing rationalization. Comprehensive ecosystem recalibration essential ensuring cooperative sector sustainability.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
