INDIA TO BUILD SUGAR STOCKS TO CUT SURPLUS

New Delhi, May 22: India will build government stockpiles of sugar to cut a surplus in the market, two official sources said on Tuesday, a move that will prop up local prices and help money- losing mills pay dues to millions of cane growers.

The Union Cabinet would soon approve a plan to create “buffer stocks” of three million tonnes of sugar to suck the extra supply out of the domestic market and to stave off a free fall in prices, one of the sources said. Buffer stocks refer to governmentheld purchases.

Other than creating buffer stocks of sugar, the government could look at other means of supporting prices, said the second source. The sources, directly involved in policy making, sought anonymity in line with government policy.

India, where sugar output usually yo- yos, has created buffer stocks in the past to tackle a supply glut. Once India approves the plan to build buffer stocks, sugar mills, saddled with excess supplies, will stock the sweetener in their warehouses and the government will pay the carrying costs for the commodity.

The plan would cost around ` 1,215 crore to the government, they said. Other than the creation of the buffer stock, the government could also look at giving cheap loans to sugar mills to expand their ethanol production capacity, the sources said.

India, the world’s biggest sugar producer after Brazil, is likely to churn out a record 30.3 million tonnes of the sweetener in the 2017- 18 season.