The association of domestic sugar industry has opposed government’s move to allow duty-free imports of white sugar. They argued that it would sternly hit the prices further and industry may face difficulty in making payments to sugarcane growers.
The price of wholesale sugar has for the first time dipped below the cost of production while in retail it reached to 30-50 per cent higher. During 2008-09 season (October-September), the production of sugar has also gone down to 155 lakh tonnes while the consumption has reached higher to 220 tonnes in 2008-09. In addition, the industry has estimated about 200 lakh tonnes of sugar production sugar in 2009-10, making a huge gap between supply and demand.
To meet the growing demand and to maintain sugar supply in domestic market, the government has decided to import 40 lakh tonnes raw sugars from Brazil. For this, it has scrap the import duty and extended the import time beyond September 2009, the end of sugar year.
Earlier, the sugar industries had crushed cane 55 fewer days compared to last season; moreover, the production cost has also been increased due to several reasons, which cumulatively raised the wholesale price of sugars.
This affected demand and industry suddenly felt that there were no takers of their sugar, which caused the sharp fall in sugar prices in wholesale market, but in retail market the price of sugar once reached to Rs.29 per kg, but now hovering around at an average price of Rs.23-24 per kg.
The UPA government wants to slow down the prices of sugar viewing the upcoming election, and for which it has allowed to import sugar at bulk level.
But, the Indian Sugar Mills Association (ISMA) has protested the move. They claimed that there were adequate stock of sugars to meet the domestic demand, and while making duty-free import, the government was breaking our back bone.
“With 2.5 million tonnes opening stocks and production of 20 million tonnes, there will be enough sugar to meet the domestic demand in the 2009-10 season," said Samir Somaiya, President, Indian Sugar Mill Association.
‘We cannot disconnect sugar prices from sugarcane prices. For instance, sugarcane prices in Uttar Pradesh (country’s second biggest sugarcane producer) has increased by Rs 15 a quintal to Rs 140, this raised the production cost,’ he added
The move of price control would benefit only bulk consumers like food processors and sweetmeat makers, he argued and expressed hope that in the next season, the industry would fill the stock gap by increasing production.
“Next season, we can expect production to recover to 200 lakh tonnes, though it is still early days. The farmers had received the signal in last November and had decided to plant sugarcane in more areas,” he said. “Even in some area, the planting has already started,” he added.
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