GOVERNMENT TO CREATE SUGAR BUFFER STOCK OF 20 LAKH TONNES

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Ministry of Food has decided to create a buffer stock of 20 lakh tonnes of sugar for a period of one year in order to mitigate the hardship of sugarcane growers. This will involve an outgo of Rs. 412 crore from the Sugar Development Fund. An additional amount of Rs. 374 crore would be released by banks on account of the buffer stock. These funds would be used exclusively for payment of cane price dues to sugarcane growers. The Government has also decided to aggressively encourage sugar exports and to provide further assistance to sugar exporters in addition to the existing reimbursement of inland transport and freight charges.

Sugar industry is today in a difficult situation. For the last three sugar seasons, the industry has been carrying increasingly large stocks. The carry over stocks from the 2001-02 sugar seasons are around 100 lakh tonnes. The expected production in the current season is around 170 lakh tonnes against domestic consumption of around 180 lakh tonnes. Export is likely to be around 10 lakh tonnes. This will still leave stocks of around 80 lakh tonnes at the end of the current sugar season.

Open market prices of sugar have shown an appreciable decline in the past few months, because of which their capacity to pay the sugarcane growers has become constrained. As on September 30, 2002, the cane price arrears are estimated to be around Rs. 1,100 crores, which is almost double the last year’s level.