Sugar Mills Current Affairs - 2020

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Govt approves creation of buffer stock for 40 lakh MT of sugar for 1 yr

Cabinet Committee on Economic Affairs (CCEA) has approved creation of a buffer stock of 40 lakh metric tonnes (LMT) of sugar. This buffer stock would be created for one year starting from 1 August 2019 to 31 July 2020. The decision of approving a buffer stock is to maintain demand-supply balance and to stabilise sugar prices.

Key Highlights

Estimated Cost & Review: Government will spend an estimated Rs.1674 crore for creation of a buffer stock of 40 LMT. However, based on market price and availability of sugar, this may be reviewed by Department of Food and Public Distribution under Union Ministry of Consumer Affairs, Food and Public Distribution any time for withdrawal or modification.

Reimbursement: provided under scheme would be met on a quarterly basis (3 months) to sugar mills. It would be directly credited into farmers’ account on behalf of mills against cane price dues. In case of any subsequent balance, it would be credited to mill’s account.

Benefits: The decisions will lead to:

  • Reduction in sugar inventories
  • Improvement in liquidity positions of sugar mills
  • Stabilization in sugar prices by alleviating of price sentiments in domestic sugar market. This will further facilitate timely clearance of cane price dues of farmers.
  • Benefits for sugar mills in all sugarcane producing States, by way of clearing sugarcane price dues of sugar mills.

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Minimum Selling Price of Sugar Increased by Rs 2/kg

The Central government has increased the minimum selling price (MSP) of sugar by Rs. 2 per kg to Rs. 31.

Minimum Selling Price

Minimum Selling Price is the rate below which the mills cannot sell sugar in the open market to wholesalers and bulk consumers like beverage and biscuit makers.

Rationale behind the Increase

The decision to increase the minimum selling price has been taken keeping in mind the debt burden of the industry. As per the data provided by the Indian Sugar Mills Association, arrears of sugarcane farmers stood at around Rs. 20,000 crore as of January-end.

The increase in the Minimum Selling Price is expected to help millers to make the payment to sugarcane farmers. The government is also putting in place a mechanism to ensure the benefit due to the increase in the minimum selling price is passed on to the sugarcane farmers.

Other Steps taken to aid the ailing Sugar Mills

The government has taken several other steps like the increase in import duty on sugar to 100 per cent, scrapping of export duty, the creation of buffer stock, and subsidy for mandatory export of 5 million tonnes in the 2018-19 marketing year to help cash-starved mills clear cane dues.

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