Govt may revise levy sugar price

Written by Sanjay Jog | Mumbai | Updated: Aug 27 2009, 03:55am hrs
The food ministry is working on a proposal to revise the levy sugar price from the current average of Rs 13 per kilogram to around Rs 20 per kg and also make available an additional 10% sugar under the levy quota only for the festival season.

The proposals which were discussed at a meeting of sugar industry representatives with the agriculture minister could now be referred to the cabinet for final approval.

However, any decision on increasing the levy sugar quota from 10% to 20% or 25% or 30% for the entire 2009-2010 decontrolling the sugar sector as being demanded by the sugar industry in lieu of increasing the levy quota has been deferred for the time being.

If approved, the hike in levy sugar price from the current level of Rs 13 per kg for all India and Rs 13.45 per kg for Maharashtra will be first such revision in the last six years.

Sources said the revised price will be applied for the current 10% levy sugar quota and also for additional 10% to be made available for the ongoing festive season. It may come into effect from September 1, 2009.

Todays agenda was enhancement in the levy sugar price necessitated in the wake of recent Supreme Court order. The apex court ruled that the basis of deciding levy sugar price be sugarcane price and how much sugarcane farmers get.

The industry has agreed to cooperate. The ministry will take up the proposal for cabinets approval, food and agriculture minister Sharad Pawar told FE over phone.

Pawar said that the increase in levy sugar quota as well as decontrol will not be possible during the ensuing crushing season. This will be possible later, he added.

As reported by FE last week, the government and industry had discussed increasing the levy sugar quota up to 30% with a view to increasing the availability of sugar in the market to help curb the rising prices.

Moreover, a section of the industry made a strong pitch for decontrol saying that time was quite opportune.

According to the industry, the government can earmark nearly 24% to 30% required for public distribution system. Under this formula, states can procure it and make available for public distribution system (PDS) and the centre will make up the expenses borne by states for this purpose.

For the balance the market will determine the price where the centre will not worry about.

Further, the cooperative and private sugar millers desired to make available nearly 50 lakh tonnes to the government.

The cooperative sugar industry suggested that of the 50 lakh tonnes, as much as 40 lakh tonne will be supplied at Rs 22 per kg and the balance 10 lakh tonnes at an increased price of Rs 32 per kg.

On the other hand, private mills submitted that they will be able to supply 30 lakh tonnes at Rs 22 per kg and another 15 lakh tonnes at the increased price of Rs 32 per kg.

The price of Rs 22 per kg was considered after taking into the price of sugarcane. The Indian Sugar Mills Association (ISMA) made a pitch for doing away with the release mechanism allowing mills to sell at Rs 32 per kg.

ISMA also called for the imposition of a cess of Re 1 on sugar.