The Union government?s proposal to let go its decades long control of the sugar industry is unlikely to enthuse the industry in the near future as prices of this essential commodity has plummeted to a new low. However, the mills owners have welcomed the proposed move as measure, which was long ?overdue?.
Lack of consolidation of fragmented capacities, its expansion and modernisation has been the stumbling block in the growth of sugar industry.
?Any move to free the sugar industry from the clutches of the government would result in expansion and modernization of the industry,? Vinay Kumar, managing director, National Federation of Co-operative Sugar Factories (NFCSF) told FE.
During the last five years, the scenario in the sugar industry has been swinging between massive surplus and huge deficit, which results in exports and imports. The retail sugar price was in the range of Rs 16-18 per kg in the Delhi market.
According to Sugar (Control) Order, 1966, the Union government has entrusted itself with the power to restrict sale, issue directions to producers and dealers and regulate movement of sugar in the country. The order stipulates the mills to deliver 10% of sugar produced by a unit as ?levy? for the public distribution of system (PDS). For the rest 90% of the produce, the Union government decides on the quantum of sugar releases to be offloaded by each mill in a month.
Industry sources said that such archaic regulations have outlived it utility. ?We have been telling the government to relax the regulations for the growth of the sugar industry, which would eventually benefit the sugarcane farmers,? Prakash Naiknavare, managing director, Maharashtra Sugar Federation said. The proposal before the Union cabinet abolished all restrictions, so that from the 2008-09 season (October-September), sugar factories can sell the entire sugar without awaiting release orders from the directorate of sugar under the ministry of consumer affairs.
However, for the PDS supply, the state governments would have the choice to procure sugar from the open market and obtain reimbursement from the Union government for selling at below market price through ration shops. ?If the government wants to sell sugar below the market price through PDS, they must procure the commodity from the open market and we are not in a position to supply sugar below market determined prices,? Vinay Kummar of NFCSF said.
According to industry sources, the country?s sugar production is likely to be around 26.5 million tonne during 2007-8 crushing season (October-September). According to official estimates, the production was pegged at 25.1 million tonne by end of May 2008, which was way below 271.09 million tonne achieved during 2006-07.