New Delhi: The government on Wednesday approved creation of 4 million tonnes of sugar buffer stock in view of bumper domestic production and help millers in clearing cane arrears worth over Rs 15,000 crore.
It also decided to keep Fair and Remunerative Price (FRP) of sugarcane unchanged at Rs 275 per quintal for 2019-20 marketing year (October-September).
FRP is the minimum price which mills have to pay to farmers for purchasing of sugarcane.
The Cabinet Committee on Economic Affairs (CCEA) approved the food ministry's proposal to create 4 million tonnes of sugar buffer stock.
In August 2018, the Centre had created a buffer stock of 3 million tonnes of sugar, costing Rs 1,175 crore to exchequer, to improve the liquidity position of the sugar mills, enabling them to clear cane price arrears of farmers and to stabilise domestic sugar price.
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India's sugar output is likely to be 32.95 million tonne in the current 2018-19 marketing year (October-September), as against the annual domestic demand of 26 million tonnes.
According to industry body ISMA, the opening stocks of sugar is expected to be at an all-time high of around 14.5 million tonnes on October 1, 2019, as against the normative requirement of around 5 million tonnes.
The decisions will lead to:
- This will ensure a guaranteed price to cane growers.
- improvement in the liquidity of sugar mills;
- reduction in sugar inventories;
- stabilization in sugar prices by alleviating of price sentiments in domestic sugar market and thereby facilitate timely clearance of cane price dues of farmers; and
- benefits for sugar mills in all sugarcane producing States, by way of clearing sugarcane price arrears of sugar mills.
