The Government will consider reducing the quantity of sugar that mills need to contribute for supply through ration shops in 2012-13 after assessing the production situation, a top Food Ministry official said.

“There is no question of reducing levy sugar quota for the 2011-12 marketing year (October-September). We will take a view on this issue for next year after taking into account the production situation,” the Food Secretary, Mr Sudhir Kumar, told reporters.

At present, sugar mills are required to provide 10 per cent of their total production as levy sugar, which is meant for public distribution system (PDS), at subsidised rates.

The sugar industry has been demanding levy sugar quota to be reduced to 5 per cent in 2011—12 marketing year to save their inventory costs.

The government needs 28 lakh tonnes of sugar for PDS supply in a year. The levy sugar quota is determined based on production and requirement, he said.

Mills supply levy sugar to the government at Rs 19 a kg, against the open market price of Rs 30—32 per kg.

Asked that the industry is demanding cut in levy sugar percentage as the government has not been lifting the entire quota, Mr Kumar said, “We are taking corrective steps to address the issue of non-lifting of levy sugar. We have also informed states and developed a software to fix loopholes ”

In a representation made to the Food Ministry recently, the sugar industry contended that there is a case for a cut in levy sugar quota as the government has not been able to lift the entire quota in the last few years and consequently the carry forward stock has increased to 21 lakh tonnes for the 2011—12 marketing year.

Though the annual PDS demand for sugar is around 26 lakh tonnes, the average lifting by the state governments has been only 16 lakh tonnes in the last six years, they said.

Higher carryover stock plus 26 lakh tonnes of levy sugar from this year’s output would take total availability of sugar for PDS purpose to 47 lakh tonnes for 2011-12, much higher than the actual requirement, it said.

The country’s sugar production is estimated at 26 million tonnes in the 2011—12 marketing year against 24.5 million tonnes in the previous year.

(This article was published on July 27, 2012)
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