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Sugar buffer raised to clear cane arrears

The government will spend an estimated Rs 1,674 crore to increase the buffer stock

By Our Special Correspondent in New Delhi

  • Published 25.07.19, 1:00 AM
  • Updated 25.07.19, 1:00 AM
The move will help the mill owners to clear cane arrears of Rs 15,222 crore of the farmers
The move will help the mill owners to clear cane arrears of Rs 15,222 crore of the farmers (Shutterstock)

The government has decided to build a buffer stock of 4 million tonnes of sugar to cut a surplus of the sweetener and clear pending sugarcane arrears of more than Rs 15,000 crore.

The government will spend an estimated Rs 1,674 crore to increase the buffer stock, while the fair and remunerative price (FRP) of sugarcane will remain unchanged at Rs 275 per quintal for the 2019-20 (October-September) marketing year.

The move will help the mill owners to clear cane arrears of Rs 15,222 crore of the farmers. The FRP is the minimum price which mills have to pay to farmers to buy sugarcane.

The food ministry’s proposal in this regard was approved at a meeting of the cabinet committee on economic affairs, headed by Prime Minister Narendra Modi. In August 2018, the Centre had created a buffer stock of 3 million tonnes of sugar, costing Rs 1,175 crore to the exchequer.

The country’s sugar output is likely to be 32.95 million tonnes in the current 2018-19 marketing year against the annual domestic demand of 26 million tonnes.

Abinash Verma, director-general of the Indian Sugar Mills Association, said, “The FRP has increased quite steeply in the last few years and sugarcane has outstripped the returns to farmers from other crops. This decision will restore some balance among the crops. It will benefit the sugar mills because 70-75 per cent of the cost of producing sugar is only on account of sugarcane. It will help keep cane price arrears of farmers under control.”

“The industry is carrying surplus sugar inventory, and the decision of the government to subsidise the full carrying cost for 4 million tonnes of sugar for one year, amounting to a direct subsidy of Rs 1,670 crore, will reduce a substantial part of the burden of sugar mills,” he added.

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