The Centre plans to create a 30 lakh tonnes sugar buffer stock to help the mills that have been affected by a 60 per cent increase in sugar production compared to last season (October 2016-September 2017). The excess production has led to a crash in prices of sugar below production costs. This has resulted in the sugar mills not being able to pay farmers on time the dues for the sugarcane they supplied. Payment arrears to farmers have increased to Rs 22,000 crore.
Financial daily The Hindu Business Line quoted Food Minister Ram Vilas Paswan as saying that the government could also help sugar mills paying them Rs 7.70 a kg for every kg of the commodity they export. The Centre will be holding the sugar stocks paying for the carrying cost, insurance and storage. The costs towards this are expected to be Rs 1,215 crore.
The move to create a buffer stock can be seen as one to help sugarcane farmers mainly in Maharashtra and Uttar Pradesh, the top two producers in the country. With elections to the Lok Sabha hardly a year away, the creation of buffer stock will help mills pay the dues to farmers. In fact, it is a move by the National Democratic Alliance to woo them to its side.
Farmers in Maharashtra are more inclined towards Sharad Pawar’s Nationalist Congress Party, while in Uttar Pradesh they usually back Ajit Singh’s Rashtriya Lok Dal. In addition, whenever Maywati’s Bahujan Samaj Party has been in power in Uttar Pradesh, she has taken care to ensure higher payment for cane, leading to many a clash between the State and the sugar industry.
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