India poised to unveil sweeteners for sugar mills, cane growers

Avadh Sugar & Energy

05/06/2018 08:45

By Mayank Bhardwaj
    NEW DELHI, June 5 (Reuters) - India is set to announce a
slew of support measures for the sugar sector, government
sources said, aimed at cutting a growing surplus and propping up
local prices to help loss-making mills and millions of cane
growers who make up a key voting bloc.
    Prime Minister Narendra Modi's cabinet is likely to back the
proposals - which include building a 3 million tonne government
stockpile to soak up excess supply from the domestic market -
when it meets on Wednesday, the sources two said.
    The sources, who are directly involved in policy making, did
not wish to be identified, in line with government policy.
    Modi's Bharatiya Janata Party last week suffered a blow in a
by-election in Uttar Pradesh, the top sugar producing state in
India's northern cane belt. Analysts viewed the result as a
bellwether for a general election due by May 2019.
    Modi needs to placate India's 50 million cane growers, whose
numbers make them an influential political lobby, to smooth his
route back to power next year.  urn:newsml:reuters.com:*:nL3N1T505W
    India, the world's biggest consumer of sugar and No. 2
producer after Brazil, has in the past created government
stockpiles, or buffer stocks, to tackle supply gluts caused by
yo-yoing output.
    Late last month Reuters reported that the government would
approve the proposal that would require sugar mills to stock 3
million tonnes of sugar in their warehouses, with the government
paying the carrying costs for the commodity.  urn:newsml:reuters.com:*:nL3N1ST3VU
    The plan would cost the government around 12.15 billion
rupees ($178.5 million).
    Other than building a buffer stock, the government is also
expected to offer cheap loans to sugar mills to expand their
ethanol production capacity and fix a floor price to ensure that
retail rates do not fall further, the sources said.
    Shares of sugar companies such as Dhampur Sugar Mills Ltd
 DAMS.NS , Mawana Sugars Ltd  MAWS.NS , Balrampur Chini Mills
Ltd  BACH.NS  and Avadh Sugar & Energy Ltd  jumped on
Tuesday in anticipation of the measures.  urn:newsml:reuters.com:*:nL3N1T723H
    Sugar prices have dropped to their lowest in 28 months,
exacerbating financial woes of sugar mills. Citing their poor
financial health, mills have said they are unable to pay cane
farmers on time.
    Mills now owe nearly 220 billion rupees, which could leap to
a record 250 billion rupees in the current 2017/18 season.
    Rising cane arrears have angered farmers.
    New Delhi scrapped a 20 percent tax on sugar exports in
March, and in April asked mills to export 2 million tonnes of
sugar to cut back inventories.  urn:newsml:reuters.com:*:nL3N1QX431  urn:newsml:reuters.com:*:nL3N1RB27L
    The government also approved a plan to provide financial
support to cane farmers for produce sold to sugar mills.
 urn:newsml:reuters.com:*:nL3N1RM3D5  urn:newsml:reuters.com:*:nL3N1S92BD 

 (Reporting by Mayank Bhardwaj; Editing by Alex Richardson)
 ((mayank.bhardwaj@thomsonreuters.com; +91-11-4954 8030; Reuters
Messaging: mayank.bhardwaj.thomsonreuters.com@reuters.net))