Stocks of sugar producers moved sideways on Wednesday after the Cabinet approved a Rs 8,000 crore bailout package for mills, which is seen to benefit 5 crore sugarcane farmers.
To notify Sugar Price (Control) Order,2018 under Essential Commodities Act,the government fixed minimum selling price for sugar at Rs 29 per kg. The average ex-mill price of sugar is in the range of Rs 25.60-26.22 per kg. That’s below cost of production.
The government will also create 30 Lakh MT buffer of sugar stock to balance demand and supply mismatch,it’s looking to compensate sugar mills to the tune of Rs 1,200 crore for maintaining the buffer stock. The government is likely to announce release mechanism through which stock holdings will be imposed on mills for the current season.
Plans to provide incentives worth of Rs 4,400 crore for ethanol blending have been notified. Sugar mills’ financial health has worsened of late due to a sharp fall in prices following a record sugar production of over 31.6 million tonnes so far in the 2017-18 marketing year (October-September) & mounting cane arrears of more than Rs.20,000 crores.