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Commodity News |
HeadLine : |
Govt mulls sugar stockpile, supply curbs to ease crisis |
Date : |
Apr 24 2015 |
The government is
considering proposals to reorganise the sugar sector with a national
stockpile of the sweetener and greater control on supply, following a
glut that has left millers with sinking profit and farmers without
payment.
Plentiful stocks, the highest since
2012, cheaper imports and mounting dues of nearly Rs 19,000 crores
that millers owe to sugarcane growers have accentuated a farm crisis
triggered by a spate of weather shocks this winter.
Missed payments have driven at least
four cane farmers to suicide in Uttar Pradesh since January, though
the state government has officially not labeled them as "suicides
induced by crop failure".
India is the world’s second-largest
sugar producer after Brazil and the biggest consumer as well.
Domestic production is set to rise to 26.5 million tonnes this year,
against a demand of 24.8 million tonnes, according to forecasts.
Amid the glut, traders had taken
advantage of falling prices in Brazil, which too ended up with a
bumper harvest, to import the Brazilian variety, rendering domestic
raw sugar unprofitable.
To ease the crisis, a group of
ministers led by finance minister Arun Jaitley has recommended the
government buy 3.5 million tonnes of sugar to soak up the surplus and
discourage imports by hiking import duty by 40%.
The government could revert to an old
system in which it decides how much sugar mills can sell each month.
All these steps, the government hopes, will improve falling wholesale
prices of domestic sugar, restore profits of millers and help them
clear dues to growers.
A cabinet proposal to build a sugar
reserve and regulate supplies would be floated next week, an official
said. The measure to hike import duty would not require a cabinet nod
but a simple notification by the commerce ministry.
The plan states that the sugar reserve
will be owned by government, but held by millers since no state
government came forward to stock it. It will be offloaded in the
markets only when the government orders its release. Source :Hindustan Times
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