Aid package for mills to export sugar likely to get nod as industry struggles with soaring stocks
NEW DELHI: The Union Cabinet on Wednesday is likely to approve a mega assistance package for sugar mills to export nearly 8 million tonne during 2019-20 sugar year starting October as the industry struggles to deal with a huge glut of the sweetener. Sources said the package could be of approximately Rs 9,000 crore to the sugar mills which will get the financial assistance under the scheme.
TOI has learnt that the central assistance could be around Rs 9.50/kg to the mills to make the export viable. Currently, the global price of white sugar is about Rs 20 per kg while the average production cost is around Rs 33 and the government has set Rs 31 as the minimum price of sugar at factory gate. Industry sources said the central assistance will be of huge help to the industry to unload the excess stock it has accumulated.
Failure to reduce the stock will impact the sugar mills capacity to pay arrears. The current arrears of sugarcane growers is around Rs 13,000 crore. “We need to bring it down quickly before the onset of next sugar season in November when fresh sugarcane will start arriving at the factory gates,” said an official.
Sugar industry insiders said the opening balance of sugar in November is likely to be nearly 14 million tonnes, which is about 9 million tonnes more than what is required. “So, we need to get rid of that extra stock, else it will be a bigger crisis next year when fresh sugar will be produced,” said one of the sugar mill owners.
Last year, the government had announced a package for export of 5 million tonnes of sugar and till now about 3.8 million tonnes have been exported by the millers. “We have another month left and let’s hope we will touch 4 million tonnes,” said an industry player.