SUGAR IN INDIA

[vsncas]

There are interesting facts and details about Sugar availability in India. All sugar industries are praying for decontrol from Government regulations.

The present position of Sugar and Sugar industries are as follows:

It is the only commodity under tight Government control.
Sugar is an Rs.80000/- crore industry, globally second to only Brazil.
Mills directly pay cane farmers Rs.55000/- crore a year.
MillS have to sell 10% of output at low, state-set price to government for PDS (Public Distribution Scheme)
Government has total control on import and export
Government decides how much sugar would be sold in open market.
States decide how far apart should two sugar mills be located
Farmers near a particular mill cannot sell elsewhere, and the mill has to but only from them
Government decides the price of cane
Mills are forced to use jute for packaging

The Rangarajan Committee on sugar decontrol evaluated the Industries, Market, International market, PDS and public over a period and the Committee will submit report shortly. In case of expected Decontrol of Sugar from the Government control, the implications on the following factors are highlighted here:

A ON MILLS
= To gain Rs.2000 crore, if not forced to sell 10% of output below cost.
= Mills will be able to quickly export when they see good prices abroad
= Industry can save Rs.10000/- crore, if not forced to use jute packaging
= Market forces will operate and help mills operate without government whims
B ON GOVERNMENT
= The government will have to bear subsidy cost of up to Rs. 2000/- crore
= Politicians won't be able to arm twist the industry to score political points.
C ON FARMERS
= They can negotiate with millers for a profit sharing mechanism linked to sugar prices
= They can sell cane to the mill that offers the highest price
= But they won't be able use politicians to force mills to pay more
= They are more likely to get prompt payments

NOTE: There were four committees studied sugar decontrol and submitted reports in the years 1998,2004,2008 and 2010. But their recommendations were not implemented.

Source : The Economic Times dt 04.10.2012 under Commodities page.

V.SENTHILNATHAN