Government may offer export subsidies to check sugar prices

FE reports

The government is likely to intervene if sugar prices continue to fall, a senior government official said on Tuesday.

The government may offer export subsidies once the exports are liberalised further and may also offer cane price subsidies to stabilise prices and help companies to pay the farmers, the official said. "Prices have been falling consistently and the outlook going forward remains the same. It is a matter of concern now, the Centre may have to intervene," the food ministry official told NewsWire18. He said falling sugar prices could lead to non-payment of cane prices by companies, which would hurt the farmers' interest.

Sugar prices have been falling consistently and are now over Rs 200 per 100 kg lower than last year's levels. Experts attribute the fall to a possible glut in the country in wake of a bumper sugar output, at over 23 mt, expected in 2006-07 (Oct-Sept). The country produced 19.3 mt of the sweetener in 2005-06. In June, wholesale prices in northern region had topped Rs 2,000 per quintal, while retail prices had touched a high of Rs 2,500 per quintal.

The government had then banned white sugar exports in a bid to check supplies, curb soaring prices and tame inflationary pressure.