Sugar Mills in India Win Price Increase From Government as Cane Costs Rise

India, the world’s biggest sugar consumer, increased the price paid to mills for refined supply under a government program, Farm Minister Sharad Pawar said.

Producers will be paid as much as 18 rupees (39 cents) a kilogram (2.2 pounds) for supply in the crop year ending Sept. 30, up from an average of 13.05 rupees last season, he told reporters today in New Delhi. The new price will apply to the entire crop year retrospectively, he said.

India’s sugar mills are required to sell 20 percent of their production at below-market prices to the government for resale to the poor under the so-called levy quota. The mills can sell their remaining output at market rates. The government controls the sugar market by telling mills how much they should sell each month.

The government plans to pare the levy quota from 20 percent to 16 percent to increase the supply to the open market, Pawar said today. The proposal will be discussed at the next meeting of a ministerial panel on food, he said.

Bajaj Hindusthan Ltd. and other mills paid cane growers as much as 280 rupees for 100 kilograms in the current season, more than the government-set price of 129.84 rupees, to secure supply. India, also the world’s second-biggest sugar producer, imported record amounts of mostly raw sugar after a drought last year parched fields. Brazil is the largest producer.

To contact the reporter on this story: Prabhudatta Mishra at pmishra8@bloomberg.net; Pratik Parija in New Delhi at pparija@bloomberg.net

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