Govt May Extend Sugar Export Sops By Another Year

NEW DELHI: The Centre is likely to extend sugar export subsidy by another year till April 2009 to help the industry liquidate surplus stock on expectations of a record output of over 30 million tons in 2007-08 season.

“Let us see what will be the total export in the sugar season. It looks like that we have already crossed about 1.5 million tons of export and if this trend continues we will also definitely give serious thought to extension by another one year,” Union food and agriculture and food minister Sharad Pawar told reporters here on Friday. He was speaking on the sidelines of 73rd annual general meeting of Indian Sugar Mills Association (ISMA).

The export sops announced by the Centre early this year is valid till April 2008. It is defraying internal transport, handling and marketing charges and ocean freight on sugar exports at Rs 1,350 per tonne for mills located in coastal area and Rs 1,450 for non-coastal states. According to ISMA, the apex industry body, India’s sugar production is estimated to be around 30-31 million tons in 2007-08 season ending September next year against 28.3 million tons in the previous year.

With consumption remaining stagnant at about 19 million tons, the country is likely to have a surplus of 22 million tons in the current season, including an opening stock of about 11 million tons from 2006-07 season. The industry is expecting to export 2.5 million tons in 2007-08 season, of which 65% would be of raw sugar.

Earlier, Mr Pawar said the local sugar industry was now facing a situation of “very high stocks, low prices of sugar and lack of demand for its sugar”.

On the minimum distance for setting up a new sugar factory, Mr Pawar said, “farmers want more sugar factories in the given area so that the competition among sugar factories get increased and they get better price for their produce”.

However, he rejected the industry’s demand to increase the minimum distance for setting up a new sugar factory to 25 km from the existing 15 km. “We carefully considered this suggestion while amending Sugarcane (control) Order in November 2006 and found that 15 km distance is sufficient to support a sugar factory of 5000 TCD (tonnes crushed per day),” he said.

On the suggestion made by the ISMA president P Rama Babu to rationalise the sugarcane pricing by linking its price to market price of sugar, he said the Centre held discussion with some of the key sugar producing states on this issue.

The minister asked the industry to make all efforts to increase yield of sugarcane rather than insisting for raising the minimum distance criterion. Mr Pawar urged the captains of the sugar sector to make further progress in converting the ‘sugar factories’ to ‘sugar complexes’, which he said was the need of the hour.

“The response was positive but considering the sensitive nature of the matter, firm commitments and conclusive decisions could not be taken,” Mr Pawar said assuring that centre would persuade the states from announcing “irrationally” high state advised price (sap) for sugarcane. Pawar also said a notification, allowing sugar mills to directly convert sugarcane juice to produce ethanol, would be issued within a month.

Highlighting the sops given to sugar industry throughout this year to help mills clear the cane arrears, he asked the companies to quickly avail the benefits provided by the centre to clear the arrears, which stood at about Rs 2,600 crore at the end of 2006-07 season.

The food minister also noted that timely action by the Centre would not only help in clearing cane price arrears of the last sugar season, but would also prevent accumulation of arrears in the current season.

Speaking in the same venue, the ISMA president said the sugar industry wants de-control of the sector from government’s rules and regulations including levy system.

He urged the government to extend the buffer stock of sugar for another year to help industry come out of the cyclical woes. The government has created a sugar buffer of 50 lakh tonnes for one year enabling the industry to receive a total of Rs 1,850 crore to clear the dues.