The Hindu Business Line : Industry, Centre differ on sugar output estimate

Sugar reading
Centre sees no need for sugar imports
Millers see low output owing to floods in UP
Producers want back old scheme of raw sugar import

Our Bureau

New Delhi, Sept 29 The sugar industry and the Centre seem to be having divergent perceptions regarding domestic output prospects for the new 2008-09 crushing season (October-September).

Original estimate

On Monday, the Union Food and Agriculture Minister, Mr Sharad Pawar, stuck to the Centre’s original sugar production estimate of 220 lakh tonnes (lt) for 2008-09, while inaugurating the 49th annual general body meeting of the National Federation of Cooperative Sugar Factories Ltd (NFCSFL) here.

This is against the likely 265 lt during the current season and the all-time high of 283.28 lt achieved in 2006-07.

For the new season, Mr Pawar said with opening stocks of 110 lt (as on October 1) and production of 220 lt “the country will not face any problem as far as sugar (supply) is concerned” and “there will not be any requirement for imports”.

However, NFCSFL president Mr Jayantilal B. Patel had a somewhat different take on the matter. According to him, sugar production during 2008-09 would be only around 200 lt, as against a domestic requirement of 225 lt.

UP’s woes

Private millers, too, project production at 200 lt or even below, with opening stocks being only 80-90 lt. The main reason for lower output is the recent floods in many cane-growing areas of Uttar Pradesh (UP). The State, which was supposed to account for 70 lt of the Centre’s estimated all-India output of 220 lt, may end up with only 55-58 lt, according to a UP-based miller. Maharashtra may also produce only 55-57 lt, against the Centre’s figure of 61 lt.

To address the situation, Mr Patel sought reintroduction of the previous advance licence/authorisation scheme, allowing duty-free imports of raw sugar against future white sugar export obligation on a ‘tonne-to-tonne’ basis.

Export obligation

Currently, mills can undertake duty-free imports of raw sugar subject to meeting the ‘actual user’ or ‘grain-to-grain’ condition. That is, the white sugar for re-export must be processed from the same raw sugar imported at zero duty against advance licences/authorisation.

Earlier, on September 21, 2004, a special dispensation was created for sugar mills, enabling them to first import raws at zero duty and process the same grain into white sugar for sale in the domestic market.

The export obligation — one tonne of white sugar for every 1.05 tonnes of raw sugar imported — could be fulfilled separately on a ‘tonne-to-tonne’ rather than ‘grain-to-grain’ basis.

Seek restoration

This facility for the sugar industry was, however, withdrawn through a circular issued by the Directorate General of Foreign Trade (DGFT) on April 16 this year. The mills now want restoration of the previous special dispensation.

“This will ensure enough availability for sugar for domestic consumption and the industry will not suffer from any additional burden of foreign sugar because of the provision for equivalent exports,” Mr Patel stated.

Added capacity

Cooperative mills in Maharashtra are said to be keen on the raw sugar import option also, in view of the new refining capacities created in the State. The Tatyasaheb cooperative factory at Warana (Kolhapur) and the Vithalrao Shinde mill at Madha (Solapur) have already set up 200 tonnes a day refineries, while two more of around the same capacity are being established before the yearend by the Shri Datta and Kisanveer cooperatives at Shirol (Kolhapur) and Satara respectively.

“These refineries would basically produce sugar of 45 ICUMSA using the imported raw sugar for the high-end domestic market or even for supplying to the European Union. The domestic cane will continue to be used for the regular plantation-white sugar of 150 ICUMSA”, sources said.

Related Stories:
Sugar production may decline to 217 lakh tonnes
Sugar output seen below 265 lakh tonnes
Supplies to sugar mills may be hit as cane area shrinks