The Hindu Business Line : `No plans for sugar decontrol'

"There is no proposal under consideration of the Government to immediately discontinue with the release mechanism," the Minister of State for Agriculture, Food and Consumer Affairs, Mr Akhilesh Prasad Singh, said at the 47th annual general body meeting of the National Federation of Cooperative Sugar Factories Limited (NFCSFL) here on Tuesday.

He was responding to concerns raised by the NFCSFL President, Dr M.R. Desai, on the impact of decontrol in a situation where mills are expected to produce around 230 lakh tonnes (lt) of sugar during the 2006-07 season (October-September) over and above opening stocks of 34 lt. As against this, the domestic requirement is estimated at only 190 lt.

"With so much surplus sugar, exports banned and the ethanol blending programme yet to take off, mills might just offload their stock in the market, which will adversely impact the sugarcane farmers, the industry and also the consumers. In the interest of all concerned, the release mechanism should continue for one more year," Dr Desai said.

The Government had originally planned to decontrol sugar with effect from March 2003, but the prevailing excessive stocks and liquidity crunch position of mills forced a postponement to October 2005. Even that date was postponed by a year on grounds that the Government needed to ascertain the actual stock position of mills, which had sold sugar without any release order by obtaining court orders. Now, it seems that the industry is seeking a further one-year extension.

Dr Desai also demanded an increase in the minimum radial distance to be maintained between an existing and new sugar factory from the current 15 km to "at least 25 km". The 15 km norm, he said, was notified when the factories with crushing capacity of 2,500 tonnes cane per day (tcd) were considered viable. But now, with the minimum economic viability pegged at 5,000 tcd and factories producing not only sugar, but even ethanol, baggase-based paper and power, there was need to reserve more cane area.

He further suggested fixation of a one-year time frame for companies filing Industrial Entrepreneurs Memoranda (IEM) to initiate operations, including possession of land and erection of plant. The IEMs of factories failing to meet the schedule should stand automatically cancelled after the validity period, he added.

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