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News
MSC bank raises sugar valuations in Maha to help millers
Date:
20 Feb 2019
Source:
The Financial Express
Reporter:
Nanda Kasabe
News ID:
35998
Pdf:
Nlink:
After the Centre raised sugar’s minimum floor price (MFP) to Rs 3,100 per quintal from Rs 2,900/quintal, the Maharashtra State Cooperative (MSC) Bank — the apex cooperative bank in the state — has increased valuations for sugar by Rs 100/quintal to Rs 3,100/quintal.
The move is expected to help sugar millers in the state currently struggling with the fair and remunerative price (FRP) payments to farmers, by giving them a little extra cash. AR Deshmukh, managing director, MSC, said the pledge amount for millers had been raised to `2,635/quintal. Taking the bank recovery of `750/quintal into account, millers would get `1,885/quintal for cane payments, he said. The bank sent a circular to factories on Saturday evening, informing them of the change in valuations.
Earlier valuations by the bank was `3,000/quintal. The state’s sugar season is expected to end in a month. Factories in the Marathwada region are expected to begin closure of operations. The season is expected to end by April 15. Following the MFP increase, several units have begun floating tenders but the market response is still tepid.
Mukesh Kuvediya, secretary general, Bombay Sugar Merchants Association, said many traders had made ample purchases on rumours of a possible hike in floor price and therefore the pipelines are currently full. Second, the gap between the small grade and medium grade sugar has come down to barely `50/quintal as opposed to the earlier difference of `100-230/quintal between the two grades of sugar. Currently, S grade is being sold at `3,100/quintal and M grade at `3,150 per quintal, he said.
Demand is expected to pick up next month onwards with the onset of summer, he said, adding that the market sentiment is usually weak during the third week. Traders will now keenly look at the quotas declared by the government and most probably will expect a higher quota with the elections coming shortly, Kuvediya observed.
So far, Maharashtra has produced 82.25 lakh tonne of sugar. In view of the state’s drought condition, the prevalence of white grub pest and water scarcity, the total production is expected to come down to 95 lakh tonne from the earlier 105 lakh tonne.
Maharashtra sugar commissioner Shekhar Gaikwad said the latest arrear report was yet to come but the approximate arrears till date would be `6,500 crore.
According to him, lower ex-mill prices and the liquidity crunch had resulted in the non-payment of FRP and to accelerate payments, the Commissionerate initially targeted mills that had paid less than 25% of their dues by issuing orders under the Revenue Recovery Code (RRC) for seizure of their properties.
Later, the Commissionerate decided to target three lowest paying mills from four sugar-producing districts for RRC action as a result of which `300 crore were deposited.
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