The Hindu Business Line : Centre turns cautious on sugar releases

New Delhi, June 30 After a release spree in the previous three months, the Centre has suddenly turned cautious on the sugar front. Only 16.60 lakh tonnes (lt) of sugar will be available for public consumption during July.

The 16.60 lt includes 12.67 lt that mills have been allocated to sell in the market as their regular free sale quota (FSQ), 1.33 lt out from the dismantling of an earlier-created buffer stock and 0.90 lt of white sugar processed from imported raws. In addition, there is 1.70 lt of ‘levy’ sugar that mills are obliged to deliver for the public distribution system.

The 16.60 lt of sugar is way below the 24 lt, 23 lt and 19 lt that were available during April, May and June, respectively.

In April, the regular FSQ alone was 16.5 lt, besides an extra release of 2.5 lt, a dismantled buffer of 3 lt and a levy quota of 2 lt. For May and June, the corresponding quantities stood at 16.5 lt, 2.5 lt, 2 lt and 2.6 lt and 14 lt, 1 lt, 2 lt and 2 lt, respectively.

Cutting down quotas

Having flooded the market with sugar during the run-up to the elections, not only has the Centre released less for the coming month, but has also decided to do away with the practice of announcing FSQ quotas on a quarterly basis.

Therefore, there is no pre-announced release quota for the July-September quarter this time and all releases henceforth will be only on a monthly basis “till suspension of futures trading in sugar remains in force”, according to a Food Ministry release.

Industry sources say the latest decision has been taken with a view to conserve sugar. With estimated opening stocks of 95 lt, production of 150 lt and consumption of 230 lt, the current 2008-09 sugar season (October-September) will close with stocks of 15 lt.

Bagasse availability

Although the country might end up importing 30 lt of raw sugar, only about 10 lt of this might be converted into whites. “Much of the raws that have been imported can be processed only from December, when the mills start crushing and there is bagasse available from the cane that can be used as fuel,” the sources noted.

That would, in turn, translate into a precarious supply position during October-November. “It makes sense, then, to have a conservative release policy,” they added.