Vastavam web: India has decided to build a 3 million tonne stockpile of sugar to soak up excess supply from the domestic market, and grant soft loans worth 44.4 billion rupees ($661.40 million) to help millers expand ethanol output capacity, the food minister said. The government has also fixed a floor price at the mill gate of 29 rupees a kilogram for refined sugar, to ensure that retail prices of the sweetener do not fall further, Ram Vilas Paswan told a news conference after a cabinet meeting chaired by Prime Minister Narendra Modi.
Late last month Reuters reported that the government would approve the proposal that would require mills to stock 3 million tonnes of sugar in their warehouses, with the government paying the carrying costs for the commodity.The plan to stock 3 million tonnes of sugar would cost the government 11.75 billion rupees, Paswan said. India, the world’s biggest sugar producer after Brazil, is awash in sugar. Large surpluses have lead to a sharp fall in prices that in turn have made if difficult for mills to pay the country’s 50 million cane growers on time.
“If we take into account 4.9 million tonnes of carryover stocks from the previous season and this year’s production of 36.4 million tonnes, inventories far outstrip our yearly consumption of 25 million tonnes,” Paswan said. “This glut has made if difficult for mills to make their sugar cane payments.”As a result, mills now owe nearly 220 billion rupees to cane growers, which could leap to a record 250 billion rupees in the current 2017/18 season.
Mounting cane arrears have angered farmers Modi’s Bharatiya Janata Party last week suffered a blow in a by-election in Uttar Pradesh, the top sugar producing state in India’s northern cane belt. Analysts viewed the result as a bellwether for a general election due by May 2019.