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India may think to build government stockpiles of sugar to cut a surplus in the market. This would be a move that would help in propping up local prices and also help sugar mills pay dues to millions of cane growers.
“Buffer stocks” are likely to be increased from 2 million tonnes of sugar to 5 million tonnes. India, where sugar output usually yo-yos, has created buffer stocks in the past to tackle a supply glut, therefore these stocks compliment in penetrating the extra supply out of the domestic market.
If the Govt. decides 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 sugar commodity.
Sugar mills’ financial health has worsened due to FRP, cane arrears and stocks of the sweetener in the wake of record production in the 2017-18 season. If the government considers of creating a buffer stock of five million tonnes it will help millers clear the cane dues to cane growers.
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