In order to help cash-starved millers to clear their cane arrears which have surged to about Rs 22,000 crore, the Food Ministry has moved a draft Cabinet note on creating a sugar buffer stock of 3 million tonne and fixing a minimum ex-mill price. This situation has been created because of sharp fall in sugar prices and record production. It has prepared a draft cabinet note proposing 2-3 interventions.
The Ministry has proposed setting up of a buffer stock of up to 3 MT sugar, fixing of a minimum ex-mill sale price at around Rs 30 per kg, re-introducing the monthly release mechanism and imposing stock limits on mills by fixing quota for each mill. Currently, the average ex-mill price of sugar is in the range of Rs 25.60-26.22 per kg, below the cost of production.
As per the data, India's sugar production has touched an all-time high of 31.6 million tonne (MT) so far in the 2017-18 season (October-September) on higher cane output, leading to a surge in cane arrears to Rs 22,000 crore. Earlier, the government had approved a production subsidy of Rs 5.5 per quintal for sugarcane farmers to help millers clear cane arrears.