With sugar sector going through a rough patch, the Centre is mulling over a proposal to create a three million tonne buffer stock of the sweetener to ease the pressure on sugar mills that owe nearly Rs 22,000 crore to farmers.
Food and Public Distribution Minister Ram Vilas Paswan said that his ministry was consulting other ministries over the proposal to create a buffer stock of sugar as part of a solution to problems faced by the sugar sector on account of a bumper production.
Paswan said this was in addition to the earlier government decision to put mandatory export limits on sugar mills to sell at least 20 lakh tonnes of the sweetener to overseas customers.
However, the minister said the mills were unable to export sugar as global prices were lower than the domestic prices which would have meant selling at a loss.
Former agriculture minister Sharad Pawar had written to Prime Minister Narendra Modi seeking his intervention in addressing the problems faced by the sugar sector due to a glut in the market.
Besides setting up of the buffer stock, the food ministry has also proposed fixing minimum ex-mill sale price at around Rs 30 per kg, reintroducing the monthly release mechanism and imposing stock limits on mills by fixing quota for each mill.
Earlier, the government approved a production subsidy of Rs 55 per tonne for sugarcane farmers to help millers clear cane arrears.