Amid all the demand for rollback of measures implemented over a period of the last one year to control sugar prices, official sources have clearly indicated that the steps initiated to bring down prices over a period of time won?t be withdrawn in haste.
?Yes, there is a demand for rollback of the steps to control sugar prices by the industry and millers following the sharp fall in rates, but nothing will be done immediately,? sources in the food ministry said.
The government had implemented a slew of measures including duty-free import of raw and white sugar, tweaking the release order mechanism to ensure that full quantity of the sweetener is sold in the open market and also stock limit on bulk consumers.
As a result of the measures and also on account of improved yields in Maharashtra and Uttar Pradesh, the two largest sugar producing states, prices, which were ruling at around Rs 45-47 per kg, has now fallen to less than Rs 35 per kg in most cities.
However, this sharp fall in prices has brought with it new set of problems as most mills are now complaining that their sale price has dropped below the cost of production.
?We are aware of the problems of millers and also know that if mills are unable to make payments to sugarcane growers in time, the produce will suffer next year. Hence, a gradual phase out of the measures implemented over the last one year is more likely,? sources said, adding that the government is comfortable if retail prices fall to around below Rs 30 per kg before initiating the rollback.
Starting early 2009, the government has taken a raft of measures to tackle sugar shortage, exacerbated by shrinking supply of cane.
Some of which are allowing mills to import duty-free raw sugar on condition that an equal quantity of white sugar would be exported within three year, imposing stock limits on sugar to tame prices, allowing duty-free imports of white sugar.
The government also banned the launch of new sugar futures contract to check speculation and price rise, directing large consumers to keep sugar stocks enough to meet their requirement for 15 days from 30, which was later brought down to 10 days as prices didn?t show any sign of falling.