Government on Wednesday decided to build a 40-lakh tonne buffer stock of sugar to take off the surplus sweetener from mills and ease the pressure on depressed prices.
The Cabinet Committee on Economic Affairs, at a meeting chaired by Prime Minister Narendra Modi, also decided to keep the Fair and Remunerative Price of sugarcane unchanged at Rs 275 per quintal for the 2019-20 marketing year.
The government would incur a cost of Rs 1,674 crore on account of the buffer stock for one year.
“The reimbursement under the scheme would be met on a quarterly basis to sugar mills which would be directly credited into farmers’ account on behalf of mills against cane price dues and subsequent balance, if any, would be credited to the mill’s account,” an official statement said here.
Bumper sugarcane harvest over the past few years has led to record sugar production, leading to low prices making it difficult for mills to pay the cane growers.
In August 2018, the Centre had created a buffer stock of three 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.
India's sugar output is likely to be 32.95 million tonnes 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 stock 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 five million tonnes.