Govt approves Sugar export policy for evacuation of surplus stocks

Sugar season for the year 2019-20 is expected to commence with an opening stock of about 142 LMT.

Created On: Aug 29, 2019 17:25 IST
Image: Bloomberg.com
Image: Bloomberg.com

The Union Government has given its approval for providing an export subsidy of Rs. 10,448 per Metric Tons (MT) to sugar mills for the sugar season 2019-20. According to government information, the total estimated expenditure of about Rs. 6,268 crore will be incurred for this purpose.

The subsidy will be depending on various things like marketing costs, upgrading cost and other processing costs, costs of international and internal transport and freight charges on the export. In the sugar season of 2019-20,  up to 60 Lakh Metric Tonne (LMT) of sugar limited to Maximum Admissible Export Quantity (MAEQ) allocated to sugar mills.

Key Highlights

  • This will be a new format of benefit in this sector as the subsidy would be directly credited into farmers’ account on behalf of mills against cane price dues and subsequent balance, if any, would be credited to mill’s account.
  • The Government has taken various measures in wake of surplus sugar production during sugar season 2017-18 (October – September) and sugar season 2018-19.
  • Sugar season for the year 2019-20 is expected to commence with an opening stock of about 142 LMT and season end stock are expected to be about 162 LMT.

Background

According to the government information, the surplus stock of 162 LMT of sugar would create downward pressure throughout the season on sugar prices affecting the liquidity of the sugar mills thereby leading to accumulation of cane price arrears of farmers. The Government has recently created a buffer stock of 40 LMT of sugar for one year from 1st August 2019 to deal with this situation.

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