Commodity Analysis

News Wrap

BL Research Bureau | Updated on May 20, 2018 Published on May 20, 2018

Sugar mills may not qualify for assistance

Nearly 40 per cent of the sugar mills in the country may not be able to take advantage of the financial assistance package announced by the Centre. The Cabinet on May 2 had decided to give farmers an assistance of ₹55/tonne of sugarcane crushed during the current cane season, to bring down mills’ dues to farmers.

Even though the assistance is to be given to farmers directly and adjusted from the arrears to be paid by the sugar mills, the government said that such sop would be available to only those mills that have complied with the directives of the Department of Food and Public Distribution (DFPD) during the season.

One of them was a directive in February on sugar stocks held by mills. The notification — meant to arrest falling sugar prices — asked mills to hold on to 83 per cent of stock they had by January 31 through February, and 86 per cent of the stock they held as on February 28, at end of March.

However, in a letter to the DFPD Secretary on May 11, the Indian Sugar Mills Association (ISMA) said that many sugar mills were not in a position to comply with this condition. According to an industry source, sugar mills were compelled to sell the stock beyond permitted limits because they didn’t have enough storage capacity as the production was nearly 50 per cent more than that in the previous season. Also, many were in compulsion from State governments to clear their cane dues to farmers, and so had to sell the sugar.

₹5,000 crore for 2G ethanol plants

Last week, the Cabinet unveiled a comprehensive biofuels policy which, among other things, allows farmers to divert excess crop produce towards biofuels production, and sets aside ₹5,000 crore to help establish second-generation (2G) ethanol refineries.

The National Policy on Biofuels, 2018, seeks to expand the range of feedstock available for ethanol production beyond sugar molasses, an official statement said. Sugarcane juice, sugar-containing crops such as beet, sorghum, corn and cassava, and damaged grains unfit for human consumption, such as rotten potato, wheat and broken rice, can be considered for ethanol production.

Besides, farmers who are “at risk of not getting appropriate price for their produce during surplus production phase” can use the surplus grains to generate ethanol — which cannot be blended with petrol — provided they have the approval of the National Biofuels Coordination Committee, the statement said. The policy also proposes a viability gap funding scheme of ₹5,000 crore for 2G bio-refineries, to be deployed over six years. The scheme will be in addition to other incentives and higher purchase prices available to 2G biofuels compared with 1G biofuels (bioethanol and biodiesel).

Foodgrains production scales new heights

The previous year’s good monsoon will help the country with a record foodgrain harvest of over 279.5 million tonnes (mt) in 2017-18, which is nearly 5 mt or 1.6 per cent more than the previous year, according to the third advance estimates of food and commercial crops released by the Agriculture Ministry. In comparison, the total foodgrain output in 2016-17 was at 275.11 mt. While the total output of both rice and wheat climbed new heights of 111.52 mt (109.7 mt) and 98.61 mt (98.51 mt), respectively, the bigger surprise was on the pulses front, the production of which crossed 24.5 mt, up 1.4 mt from 23.13 mt in 2016-17.

Wheat procurement increases

Wheat procurement has risen 16 per cent to 31.87 million tonnes (mt) till date this marketing year. According to official data, it is set to cross the Centre’s target of 32 mt. The Food Corporation of India (FCI) and State agencies had procured 27.57 mt in the same period (April-March) in the 2017-18 marketing year.

Total wheat procurement stood at 30.82 mt in 2017-18, and the government had fixed a higher target in view of record output. An official from FCI said the increase in procurement centres has helped wheat procurement. As many as 18,326 centres have been established for wheat procurement this year.

Compiled by BL Research Bureau

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