Central Government’s Incentives for Jute, Cotton and Sugar to Farmers (GS 3, Economics, The Hindu, Indian Express, PIB)

Central Government’s Incentives for Jute, Cotton and Sugar to Farmers (GS 3, Economics, The Hindu, Indian Express, PIB)

News/ Context: The Cabinet Committee On Economic Affairs has approved impressive measures to support farmers growing jute cotton and sugar. 

The cabinet committee on economic affairs at a meeting increased the price of ethanol to Rs 63.45 for the upcoming market season of sugar, starting in December. This ethanol is extracted from sugarcane juice for blending in petrol. This is an increase of 80 paise from the previous year. The rate of ethanol extracted from B-heavy molasses is up  by Rs 1.47 a litre, while that of ethanol extracted from C-heavy molasses has been increased by 97 paise a litre. 

Ethanol blending is considered as crucial in controlling the carbon emission coming out of petrol. It is expected that ethanol blending with petrol will reach 10% (E10) next year and 20% (E20) by 2025. The ethanol blending programme also reduced the dependency on crude oil imports.

E10 fuel is a blend of 10% ethanol with unleaded petrol (gasoline), E20 fuel is a blend of 20% ethanol with unleaded petrol. India in 2021 has achieved only 6% of blending. 

According to the National Institution for Transforming India (NITI Aayog), a government-backed policy think tank.“To achieve the 20% target, India needs to expand its ethanol production to 10.2 billion liters—including 5.5 billion liters from sugarcane and a whopping 4.7 billion liters from grains”.

Oil market companies buy ethanol from distilleries and sugar mills at the price set by the central government. Sugar mills are required to pay the sugarcane farmers for the sugar they buy,  and we have witnessed huge arrears and delay in these payments to farmers. Against this we are witnessing a sizable chunk of protests from  sugarcane farmers  in the region of Western Uttar Pradesh and could be a critical issue in the state’s coming assembly polls. The current rate hike is expected to reduce the pending arrears. 

A committed price support of ₹17,408.85 crore has also been approved by the CCEA to the Cotton Corporation of India (CCI) as reimbursement for its losses in procuring crops from farmers at minimum support prices over the last seven years. Around 58 lakh farmers and more than 400 lakh people engaged in trade and processing are dependent on cotton for their livelihood. The price support operation helps stabilize the prices and alleviate farmers distress. Whenever the market price comes down from the MSP rates set by the centre, in a bid to protect farmers from distress sales the Cotton Corporation of India is mandated to procure all  Fair Average Quality grade cotton from farmers without any quantitative ceiling.  The CCI procured a third of the country’s cotton production over the last two seasons during the pandemic and paid 40 lakh farmers more than 55000 crore. 

Currently, raw cotton prices in various markets across the country are ruling above ₹7,000 a quintal against the MSP of ₹5,726 fixed for this year. Prices are much above MSP, which means the CCI does not need to do any market intervention this year ( CCI does not need to buy cotton from farmers when farmers are already getting good prices, more than MSP from market/textile producers).  

The Cabinet Committee on Economic Affairs in another decision approved reservation norms for the mandatory use of jute in packaging this year. It has decided that 20% of sugar and 100% of food grains must compulsorily be packaged in jute bags. Two thirds of the total raw jute produced last year were consumed because of such reservations.. The central government itself purchases jute sacking bags worth around 8000 crore a year.  The government ensures a guaranteed market for the produce of 40 lakh jute farmers mostly in the eastern India and supports 3.7 lakh Jute mill workers largely in West Bengal. 

What is A, B and C molasses: 

First molasses/ A molasses ; It  is an intermediate by-product resulting from first sugar crystal extraction (A sugar), from initial processing at the sugar factory. A molasses contains 80-85% dry matter (DM : The dry matter or dry weight is a measurement of the mass of something when completely dried). If it has to be stored, it should be inverted in order to prevent crystallization.

Second molasses/ B molasses:  It has approximately the same dry matter (DM) content as A molasses but contains less sugar and does not spontaneously crystallize.

Final molasses/ C molasses (blackstrap molasses, treacle) is the end by-product of the processing in the sugar factory. It still contains considerable amounts of sucrose (approximately 32 to 42%). C molasses does not crystallize and can be found in liquid or dried form as a commercial feed ingredient.

Md Layeeque Azam, Economics Faculty

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