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Tuesday, Jun 05, 2007
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Sugar Agri-Biz & Commodities - Agricultural Policy Sugar buffer may be hiked Our Bureau
Measures on cards Centre considering increasing sugar buffer stocks to 50 lakh tonnes Food Secretary says wheat import tender likely in 15 days
Mr Sharad Pawar
Mumbai June 4 The Union Government is considering a proposal to increase sugar buffer stocks from the present level of 20 lakh tonnes to 50 lakh tonnes, the Union Agriculture Minister, Mr Sharad Pawar, told reporters on the sidelines of a function to mark the inauguration of the Central Warehousing Corporation's Logistics Park here on Monday.
Record output
The industry has been seeking an increase in the sugar buffer stocks in the wake of record sugar production during 2006-07 (October-September) estimated at over 250 lakh tonnes against 195 lakh tonnes the previous year. Sugar prices have been ruling rather low (Rs 1300-1400 a quintal) in the wake of huge inventory build up. Maharashtra cooperative mills, in particular, have had to face the brunt of low prices, with output projected to reach a peak of 70 lakh tonnes. If the proposal to increase the buffer stock sails through, sugar subsidy is sure to become more burdensome, according to experts. They explained that after the Government increases buffer stocks, actual stocks will continue to remain with the mills but the government will pick up the carrying cost.
Import tender
On wheat imports, the Minister said there would be no fresh tenders for import of wheat at least for the next few days. However, Mr T. Nanda Kumar, Secretary, Food and Public Distribution, said the Government might take a decision on calling for fresh tender for wheat imports within 15 days. On the Government directive, the State Trading Corporation floated a tender for import of 10 lakh tonnes of wheat but last week decided to cancel it subsequently on the ground that price quoted was too high ($265 a tonne). The Government imported about 55 lakh tonnes of the grain during the last fiscal.
Negative signal
Analysts feel that the cancellation of FCI's call option tender earlier and STC tender now has sent a negative signal to the world market. Trading houses may be wary of participating in future tenders due to this vacillation. Mr Nanda Kumar also hinted that the Government was mulling a cut in import duty on edible oil. Over the last five months, customs duty on various palm oils has been cut thrice. Crude palm oil duty currently is 50 per cent, compared with 80 per cent last year. Duty on soyabean oil has remained unchanged at 45 per cent. Tariff values on various oils have remained frozen since July last year. Because of revenue implication, a final decision on duty changes will have to be taken by the Finance Ministry. Share prices of major sugar stocks dipped marginally on the bourses. Balrampur Chini closed at Rs. 74.3, down 3.38 per cent from the previous close of Rs. 76.90, while Bajaj Hindustan Sugar and Industries closed at Rs. 28.55, down 4.99 per cent from the previous close of Rs. 30.05. Sugar stocks were also adversely affected by reports that the UP Government has cancelled the Sugar Promotion Policy 2004, which had offered several incentives for setting up new units and expansion of existing ones.
Related Stories: More Stories on : Sugar | Agricultural Policy | Storage | Wheat
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