Apex co-operative bank of Maharashtra, India to raise sugar valuation to Rs 2,900 per quintal

The Maharashtra State Cooperative Bank (MSCB), the apex cooperative bank of the state, has decided to increase sugar valuations to Rs 2,900 per quintal, keeping in mind the Minimum Floor Price (MFP) decided by the Centre.

The central government declared MFP at Rs 2,900 per quintal when a package was announced for the sugar sector last week.

During the middle of the season, sugar prices had dropped to Rs 2,500 per quintal from Rs 3,500 per quintal, leading to a lot of pressure on the sector. The Fair and Remunerative Price (FRP) has been fixed at Rs 2,550 per quintal by the Centre, making it difficult for sugar factories to make cane payments to farmers.

Since the Centre has now decided a Minimum Floor Price at Rs 2,900 per quintal after a meeting with Maharashtra chief minister and Union minister, the bank has also come forward to increase sugar valuations to Rs 2,900 per quintal to help out the sugar sector.

Meanwhile, India is likely to export around 500,000 tonnes or just a quarter of the volume mandated by the government for overseas sales in the 2017-18 season amid higher prices at home, industry body Indian sugar Mills Association (ISMA) said.

Lower shipments from the world’s second-biggest sugar producer could support global prices, but would increase India’s opening stocks for the next marketing season when output is expected to surge to a record.

Sugar is being sold at around Rs 31,000 per tonne in India, while exporters are getting less than Rs 21,000 per tonne, trade sources said. Local sugar prices have jumped 20 per cent in a month amid government measures to help loss-making mills and cane growers who make up a key voting bloc.

However, despite the bumper produce of sugarcane this year, area under sugarcane cultivation in Maharashtra, India’s second-largest sugar producing state, is expected to increase by nearly 25% in the next crushing season beginning October 1.

Officials in Maharashtra’s sugar commissionerate said the area under sugarcane cultivation during 2018-19 is expected to be around 11.26 lakh hectares, up from 9.02 lakh hectares recorded in the ongoing year.

Shekhar Ghosh is a communications consultant and and former journalist, who has edited and written for publications such as like Business India, Business Standard, Business Today and Outlook.

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