Food and agriculture minister Sharad Pawar on Wednesday asked state governments to remove all impediments on free and unrestricted movement of denatured ethanol and avoid imposition of state taxes to tackle the glut in availability of sugar in the country.
Emphasising that ethanol production would succeed only if continuous and adequate demand for ethanol is ensured, Pawar said, “The best way to achieve this is by including denatured ethanol of 99% strength in the list of special goods under the CST Act, 1956. Such a step will lead to many benefits from the point of the national objectives while improving the condition of a sugar industry and the sugarcane farmers to a large extent,” he said.
Pawar also argued that fixing state advised prices (SAP) by different states over and above the statutory minimum price (SMP) fixed by the Central government is leading to huge cane price arrears. The gap between the SAP and SMP has been widening for some states quite drastically.
The gap in SAP and SMP has resulted in huge production of sugarcane and low sugar prices resulting in the sugar mills not being able to meet the cost of sugarcane and building up of cane price arrears. As compared to last year when there were practically no cane arrears, the arrears have risen to the tune of Rs 3,800 crore this year, affecting the entire sugar industry.
The domestic consumption of sugar is about 190-lakh tonne a year, production in the coming year is likely to be about 290-lakh tonne. This, together with the closing stock of about 119-lakh tonne of sugar from 2006-07, would result in a very large sugar stock in the country.
The minister stated that the measures taken to assist the sugar industry were not enough to liquidate such huge stocks. The answer to the cyclical problem faced by the sugar industry probably lies in converting surplus sugarcane directly to the ethanol, Pawar said.
The government has taken a number of steps such as creation of a buffer stock of 50-lakh tonne, waiver of margin requirement on the buffer stock and export assistance. The meeting of state finance minister and ministers in charge of sugar and sugarcane had been called to discuss issues relating to pricing of sugarcane and issues connected with ethanol production from sugarcane.