Commodity Analysis

News Wrap: Centre mulls building 3-mt sugar buffer

BL Research Bureau | Updated on June 03, 2018 Published on June 03, 2018

The Centre may create a 3-million-tonne sugar buffer stock to help sugar mills tide over the crisis triggered by overproduction, Food Minister Ram Vilas Paswan said last week. The glut in sugar production during the current 2017-18 season (September-October) has led to the sweetener’s price crashing to levels below cost of production.

Paswan added that creating a buffer stock will be a relief for sugar mills. The mills will hold the sugar, but the government will bear the carrying cost, including interest, warehousing and insurance, estimated at about ₹1,215 crore.

The Minister also hinted at the possibility of the government paying an assistance of ₹7.70 to mills for every kilogram of sugar they export.

In an order issued in March, the Centre had allowed mills to export 2 mt under the Minimum Indicative Export Quota scheme for the 2017-18 marketing year.

Mills worried over wheat import duty hike

Roller flour mills in South India are worried over the hike in wheat import duty as it makes them uncompetitive in the domestic market compared with their counterparts in the wheat-growing areas in the North. Reacting to the hike in the customs duty to 30 per cent, DK Gupta, President, Tamil Nadu Roller Flour Mills Association, said the increase has come as a surprise given that no imports have been happening since November, when the duty was first doubled to 20 per cent.

Previously, mills imported 50 per cent of their requirement at about ₹1,900 a quintal, and blended it in equal proportions with domestic produce priced at about ₹2,100, for quality reasons. This also helped average out the prices at about ₹2,000 which was viable for the roller flour mills in the South, where wheat is not grown.

If the grain is moved from the North, it costs ₹200 more for transport, in addition to 2 per cent wastage. Traders in wheat-growing areas can directly move processed wheat products South at more competitive prices, Gupta said. According to industry sources, the import duty hike will only benefit traders and millers in the wheat- growing regions.

Fruit & vegetable output pegged at 307 mt

Horticulture production is estimated at 307.2 million tonnes (mt) in the current year (July-June), up 2.2 per cent over the previous year, according to second advance estimates released by the Agriculture Ministry last week.

The production of fruits is estimated to be about 94.4 mt and vegetable 182 mt, the data showed.

Total area under horticulture crops is also up 2.3 per cent to 25.4 million hectares (mha) from 24.85 mha in 2016-17. At 50.33 mt (48.61 mt), potato production is estimated to increase 3.5 per cent, whereas a slump is expected in the output of onions, which is down 2.6 per cent to 21.84 mt.

The highest increase in production among major vegetable crops, however, is in tomato, where output is projected to grow 6.6 per cent to 22mt.

Among fruit crops, citrus fruits’ output is expected to go up strongly by 9.6 per cent to 12.51 mt (11.42 mt). The production of plantation crops such as cashew registered a decent growth. Spices production will be up 5 per cent to 8.54 mt (8.12 mt). Compiled by BL Ressearch Bureau

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