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Govt to create buffer stock for Sugar

The government is considering creating a three million tonne Sugar buffer stock to help millers clear about Rs 22,000 crore dues to cane growers, the Food Ministry said in a statement.

Sugar mills' financial health has worsened due to sharp fall in prices of the sweetener in the wake of a record production of 31.6 million tonne (MT) so far in the 2017-18 season (October-September).

Besides setting up of the buffer stock, the food ministry in the draft cabinet note has proposed fixing minimum ex-mill sale price at around Rs 30 per kg, reintroducing the monthly release mechanism and imposing stock limits on mills by fixing quota for each mill, sources said, according to the media report.

The ministry is considering fresh options because mills are not able to export 2 million tonne sweetener, even at loss, and liquidate surplus stock.

The petroleum ministry is looking at ways to help Sugar factories by tweaking policies in ethanol sector.

Presently, the average ex-mill price of Sugar is in the range of Rs 25.60-26.22 per kg, below the cost of production.

Earlier this month, the government approved a production subsidy of Rs 5.5 per quintal for Sugarcane farmers to help millers clear cane arrears.

The Centre has already doubled Sugar import duty to 100 per cent and scrapped export duty to check sliding domestic prices. It has also asked mills to export 2 MT Sugar.

Sugar output of India, the world's second largest producer, stood at 20.3 MT in the 2016-17 marketing year. The annual domestic demand is estimated at 25 MT.

 

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