Govt plans 2 mt sugar buffer till April 2008

The government had decided to create a 2 million tonne sugar buffer for a year till April 2008 in the wake of surplus availability and falling prices, Agriculture Minister Sharad Pawar said today.

The buffer would be set up from Tuesday, the minister told Lok Sabha in a written reply. The creation of the buffer would cost the government Rs 378 crore and an additional Rs 420 crore credit would be provided to the mills by the banks.

"Thus Rs 798 crore would be available with sugar factories to pay cane price to sugarcane farmers," Pawar said.

Uttar Pradesh alone is likely to report cane arrears worth over Rs 2,000 crore by the end of the current sugar season. Sugar prices in the country have been consistently falling since the beginning of the season in October due to projections of higher output.

The output this year is seen rising 35 per cent year-on-year to nearly 26 million tonnes. The total sugar supply in the season has been pegged at 30 million tonnes, including carryover stocks from the last season. The wholesale prices have slipped from Rs 2,000-2,100 a quintal in October to Rs 1,400-1,500 currently in the wake of higher output estimates and negligible demand.

In a separate reply, Pawar said the country was likely to export up to 1.5 mt sugar in the season ending September due to surplus stocks.

"However, this will depend on global sugar prices," the minister said.

International prices have eased to below $300 a tonne from $500, since the ban was imposed in June, making exports unfeasible.