With the consistent decline in sugar prices since January and expectations of high production in the 2010-11 crop season, the Union food ministry has started the groundwork for decontrolling the sugar sector. Agriculture minister Sharad Pawar said Friday that the ministry is planning to recommend steps for decontrolling the sector after getting a fair idea of the actual crop situation around August.

Food ministry sources said the entire gamut of issues concerning deregulation including modifying the release order mechanism, matters related to reservation of sugarcane area and levy price determination could be considered by the ministry while preparing its final proposal.

?Decontrol involves several issues and it remains to be seen whether all or some of the proposals are finally considered,? said a senior official who didn?t wish to be named.

A few years back, a proposal on sugar decontrol was sent to the Cabinet, but it fell through due to divisions over the extent of decontrol and doubts over how public agencies who purchase sugar from government will meet their needs.

Despite the decontrol, fixing statutory minimum price (MSP) or in its new avatar as fair and remunerative price (FRP) is expected to remain with the government.

?We will ensure MSP for farmers. The government will keep the right to give minimum price to farmers,? Pawar told reporters after a conference of National Cooperative Sugar Mills.

Officials attributed the renewed interest in sugar decontrol to the near-unanimity in the sugar industry?including both cooperative and private millers ?about the need to unshackle the sugar industry.

Earlier, cooperative mills were not in favour of total decontrol fearing it could hurt the interests of farmers. But of ,late they have also come around the view that decontrolling sector is imperative. ?I honestly feel that the trend which I am observing, I hope this will continue. If the trend continues, this is the proper time to create a situation where nobody should come to the food ministry. This is a proper time to give a serious thought to withdraw various types of controls,? Pawar said.

The government controls sugar sector right from fixing the support price of cane to the quantity of the sweetener to be sold in the open market every month. The Indian Sugar Mills Association (ISMA), the apex body of private sugar millers, has been demanding decontrol for several years. ?Decontrol is a must to promote competition in sugar sector ? just like in telecom. It would benefit consumers, farmers and millers. Let us compete for sugarcane which would ultimately benefit the farmers,? Vivek Saraogi, president of ISMA and managing director of Balrampur Chini Mills, one of the country?s largest integrated sugar mills told FE recently.

He suggested that a regulator should be appointed for the sugar sector on the lines of the telecom regulator, whose mandate would be check any malpractice arising out after decontrolling the sector. ?The farmer is our (sugar mills?) biggest assets, let us look after him,? Saraogi added.

The country?s sugar output has improved to 18.5 million tonne in the 2009-10 crop year (October-September) from the earlier estimate of around 16 million tonne. The sown area under sugarcane for the next crop year is also higher. As per official data, sugarcane has been planted in 47.37 lakh hectares till July 1, against 41.79 lakh hectares in the same period last year. Recently, state cane commissioners estimated sugar production in the 2010-11 crop year at 23 million tonne, while the industry bodies have made higher projections.

Scrips sweeten

Sugar counters gained 11% on Pawar?s statement. Bajaj Hindusthan rose 3.19% to settle at Rs 22.65 on BSE after going up 4.78% during trade to an intra-day high of Rs 23. Balrampur Chini finished at Rs 87.15, up 3.87% after climbing 5.72% to hit a month?s high at Rs 88.70. Oudh Sugar closed at Rs 40.40, up 10.38% after rising 15.16% to touch a month?s high of Rs 42.15. Shree Renuka climbed 3.12% to close at Rs 71.15 after touching a month?s high of Rs 72.50. Simbhaoli Sugars finished at Rs 42.70, up 5.17%, and Triveni settled up 5.34% at Rs 107.55.