Spotlight

New Delhi, 14 November 2007

GLUT OF SUGAR IN STORE

NEW DELHI, March 15 (INFA): India is happily placed on the sugar front. With the production estimated at around 230-240 lakh tonnes in the 2006-07 season, the sugar industry may soon be facing a glut of the sweetener in the market.

The Union Government has not fixed any target for export of sugar during 2006-07 season. However, it is estimated that about 15 lakh tonnes would get exported in this season, according to the Agriculture and Food Minister, Sharad Pawar.

With the opening stock at the start of season in October 2006 at 40 lakh tonnes, the surplus sugar is expected to be at over 70 lakh tonnes as the country’s annual demand is pegged at only 190 lakh tonnes.

Besides, export, the Government is also considering a proposal to start buffer stock of sugar on the lines of foodgrains procured by Government. The buyers in foreign markets are showing interest at $300-305 per tonne while the sellers are asking for $310-315 per tonne.

On the feasibility at ports, the Mumbai port, which handles the maximum volume of the country’s sugar export, is equipped to manage a maximum of 75,000 tonne in a month.

The Government released 13.77 lakh tonnes of sugar for April, 2007. Out of this 12.00 lakh tonnes have been released in free sale and 1.77 lakh tonnes in levy.

Meanwhile, in a move to help farmers and sugar producers amid expectation of bumper production, the Government is understood to have decided to give major incentives for export while creating a buffer stock of 20 lakh tonnes of the price-sensitive commodity.

Considering a number of proposals, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Manmohan Singh decided to lift the ceiling on sugar exports and provide subsidies to sugar mills for export.

The buffer stock of 20 lakh tonnes of sugar would be created for a maximum of two years, but no official communication could be obtained on the decisions. Export subsidy at the rate of Rs.1,350 per tonne would be given for the sugar mills in coastal areas.

The Tamil Nadu farmers have in the meanwhile demanded the minimum support price (MSP) and the State advised price (SAP) for sugarcane to be linked to the recovery of sugar and the price of allied products like molasses, ethanol and the co-generated power.

They said the SAP of Rs.1,025 tonne was not equal to the actual cost of production. Even Rs.1,200 would not be sufficient. Only linking of sugarcane price to all by-products and ‘peak recovery’, instead of the ‘average recovery’, would enable them to get a remunerative price.

The farmers, overburdened by the rising input and labour cost, are looking for increased prices to make cultivation viable and sustainable. ---INFA