The Hindu Business Line : Govt may ask sugar mills to hike supply to PDS

THE Centre is likely to change the levy sugar ratio from the current 90:10 to 80:20 in view of expected shortfall in supply under the public distribution system (PDS) for the current season and even in the next season as a result of lower output.

Actual supply of levy sugar in 2002-03 season had been reduced to 22.54 lakh tonnes (monthly average of 1.87 lakh tonnes) from around 25.94 lakh tonnes (2.16 lakh tonnes) in 2001-02, down by 13 per cent, according to trade sources. The Government earmarks a specified quantity of sugar to be supplied by mills for the PDS out of their production and this is called levy sugar. The NDA Government had cut the levy supply quota to 10 per cent of the mills production on higher output. At one point of time, the levy quota was as high as 40 per cent.

"There is a shortfall this year too. Against monthly requirement of levy sugar under PDS of 2.25 lakh tonnes, the monthly average of current season (October 2003-May 2004) is so far around 2.03 lakh tonnes. Total supply during the eight months of the current season is 16.31 lakh tonnes. Total requirement for the season is expected to be around 27 lakh tonnes plus additional release of about 3 lakh tonnes every year during the festival months (October-December). Thus, shortfall is more than 10 lakh tonnes," industry sources said.

The Government had reduced the levy percentage of domestic sugar producers from 15 per cent to 10 per cent with effect from February 1, 2002. Under the current PDS system, levy sugar supply is now restricted to below poverty line families only in all States/Union Territories except in north-eastern States, hilly States and island territories. It is 500 gm per head per month at Rs 13.50 per kg.

Cane production for the current season is expected to be significantly lower due to water shortage and drought conditions in the major growing States such as Maharashtra, Andhra Pradesh and Tamil Nadu. This is expected to affect the production of sugar in the current season and the next season as well.

Sugar production for the current season is expected be around 150 lakh tones compared to 201 lakh tonnes in 2002-03. Consumption is expected to be lowered around 180 lakh tonnes.

"Carry forward stocks and the current production can easily take care of current demand till February 2005, (excusive of new season crop)," an analyst said.

Sowing of sugarcane has commenced. Area coverage so far is about 31.7 lakh hectares compared to 38.4 lakh hectares in the corresponding period last year, according to a latest release from the Union Ministry of Agriculture.

Normal area under sugarcane is about 43 lakh hectares. .