India prepares sweeteners for sugar mills, cane growers (updated)

Avadh Sugar & Energy

05/06/2018 12:41

(Recasts, adds quotes from the minister)
    By Mayank Bhardwaj
    NEW DELHI, June 5 (Reuters) - India is set to announce
support measures to cut a growing sugar surplus and prop up
local prices, the food minister said on Tuesday, a move aimed at
helping 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 as early as Wednesday.
    The measures include building a 3 million tonne government
stockpile to soak up excess supply from the domestic market and
granting soft loans worth 45 billion Indian rupees ($670
million) to help millers expand their ethanol production
capacity, Food Minister Ram Vilas Paswan said.
    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
    Paswan said the measures could cost the government 80
billion rupees, but refused the give full financial details.
    "We'll be to able to give you the details about these
measures once the cabinet clears this," Paswan said.
    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
    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 owe more than 220 billion rupees to the cane farmers
for this year, Paswan said. Rising cane arrears have angered
farmers.
   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
    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
($1 = 67.1450 Indian rupees)

 (Reporting by Mayank Bhardwaj; Editing by Alex Richardson)
 ((nidhi.verma@thomsonreuters.com; +91-11-4954 8031; Reuters
Messaging: nidhi.verma.thomsonreuters.com@reuters.net))