India to fs to export surplus sugar |
The government of India will first scrap the 20% of sugar export tax and then ask mills to compulsorily export 2-4 million tonnes of the sweetener to suck the extra supply out of the country. The country is likely to produce a record 29.5 million tonnes of sugar in the 2017/18 season that ends on September 30, up 45% from the previous year, hammering local prices down by more than 15% in the past six months. In India, the federal government fixes the price that sugar mills must pay every year to cane farmers, but some state governments invariably raise the rate to court growers, a large voting bloc.Mills complain that a sharp drop in local prices erodes their profitability and makes it difficult for them to pay cane growers on time. Farmers get restive if cane arrears accumulate, forcing the government to step in to help the sugar industry to quell anger among cane growers. Sugar mills currently owe 140 billion rupees to cane farmers as lower sugar prices created a liquidity shortage, the government told parliament. Currently global sugar prices are not attractive enough to export, so mills may have to sell their extra stocks at a loss and lower inventory at home would eventually help mills because domestic rates would go up, the sources said.
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