India withdraws sugar output incentive as prices surge

 

India has withdrawn an incentive to sugar output after local prices rose on a supply shortfall, a fallout of drought in cane growing areas.

The incentive has been revoked with an immediate effect as prices reached levels to ensure operational viability of mills, food ministry officials said.

Under the scheme, the government had agreed to pay cane growers 45 rupees a tonne, representing about 2 percent of the cost incurred by mills to tide over a glut that prevailed nearly one and half year ago.

Earlier this year, India cut overseas sales target for sugar after the two straight droughts slashed domestic production and raised prices.

India, the world’s second-biggest sugar producer after Brazil, sold around 1.5 million tonnes overseas in the current year, far short of the initial target of 3.2 million tonnes.

On Thursday in Mumbai, retail sugar prices ranged between 40-44 rupees/kg against 30-32 rupees a year earlier, traders said.

 

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