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Decks cleared to export sweetener from Maharashtra

Nanda Kasabe

Decks have been cleared for sugar exports in Maharashtra as the Maharashtra State Cooperative Bank (MSCB) agrees to resolve the issue of short margins arising out of the difference in valuations of sugar by banks and the prevailing market prices. With this, millers can export more of the sweetener.

AR Deshmukh, managing director of the apex cooperative bank in the state, said a short-term loan of `430 crore for taking care of this difference would be given to banks for the season of 2018-19 to enable exports.
Till now, millers were facing difficulties to export sugar since banks were not releasing the sweetener unless millers pay up the differential.

Deshmukh said for this, the bank would release a short-term loan of `1,000 per quintal with a valuation of `3,000 per quintal given by the bank and the market value of `2,000 per quintal. The total amount would come up to `430 crore cumulatively, he said.

MSC bank has some 51 cooperative mills under its ambit. Moreover, regional rural cooperative banks and district cooperative ones also follow the example set by MSC Bank and eventually, 102 cooperative mills in the state would be able to export sugar now.

Sanjay Khatal, managing director, Maharashtra State Cooperative Sugar Factories Federation, expressed satisfaction at the decision taken by MSC bank and stated the state will be exporting the commodity. Maharashtra has already contracted export deals for around 2 lakh tonne and another 7.7.5 lakh tonne will be finalised, with this decision, he said. Maharashtra has received an export quota of 15.54 lakh tonne.

Till now, despite the completion of FRP, mills were unable to export sugar since the banks were not ready to release stocks under their pledge due to short margins arising out of the difference between the valuation of stocks by banks and the current realisable value of sugar as per the ruling international market prices, Khatal had pointed out.

The government of India through its notified scheme for assistance to sugar mills has agreed to provide assistance for payment of FRP in the No Lien Accounts of either nationalised/cooperative banks. Despite the same, banks are reluctant to release the material for two reasons. They desire written undertaking from the government of India that production assistance can be adjusted towards the short margin towards the material being released for exports. They want the payments to be credited to the No Lien Accounts within a reasonable period of time, say two months. It is with great reluctance to note that banks have agreed to sanction additional limits only to facilitate exports, Khatal had explained.

The millers had urged the government to agree to their plea and issue permission for adjusting short margin from the assistance for the payment of FRP in the No Lien Accounts against the additional limits banks have agreed to be sanctioned for mills specifically for exports.

Vidyadar Anaskar, chairman of the administrative board of MSC Bank, had earlier stated the bank had been seeking a written undertaking from the Centre that the payment would be credited into a separate Non Lien Account and not into the accounts of millers.He said the sugar commissioner should also give a written undertaking on the amount of FRP paid by millers to farmers. He said bank cannot arbitrarily release the material unless there is a written undertaking from the government.
The valuations, decided by MSC Bank, are followed by regional rural banks and urban cooperative banks in the state.

In addition to this, after a recent visit of the Chinese delegation, millers expect to sign deals for 5 lakh tonne. Millers from the state had also approached the Centre with a plea to adjust the short margins.

The National Federation of Cooperative Sugar Factories was also seeking a soft loan of `10,000 crore to tide over the current problem of short margins and the financial distress faced by most millers. Its president, Dilip Walse Patil, had explained the short margins occur because of a difference in the valuations made by the banks and the actual prices of sugar.

To deal with the excess sugar production in the country, the ministry has recommended offsetting the cost of cane to mills by increasing the production assistance to growers to `13.88 per quintal for the 2018-19 marketing year from `5.50 for the year. The ministry has suggested helping mills to export 50 lakh tonne under the Minimum Indicative Export Quota.