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With a glut like situation in sugar resulting in lower prices, the Agriculture Minister, Mr Sharad Pawar, has sought permission to allow sugar exports immediately saying this would help the industry to pay cane growers.
In a letter to the Finance Minister, Mr Pranab Mukherjee, Mr Pawar said: “The estimated sugar production of 24.5 million tonnes (MT) would now be nearly 25 MT, more than the estimated consumption of 22 MT during 2010-11 sugar season.
“Considering the committed exports under the advance licence scheme of 1.2 MT, there is still an exportable surplus of 1.3 MT in the country,” he said.
Since the Empowered Group of Ministers (EGoM) on Food is yet discuss and take a decision on allowing sugar exports under the open general licence (OGL), Mr Pawar has pressed the panic button saying any delay would lead to increase in cane arrears and reduction in cane area in the coming years.
He has sought the intervention of the Finance Minister for an early decision on this issue because the window to export sugar from India is available only up to April-end.
At present, the Government has kept on hold export of 0.5 mt of sugar under OGL as the Prime Minister has directed the Food Ministry to refer the matter to the EGoM in view of high inflation. But earlier, it had allowed mills to meet their export obligation (ALS) of nearly 1.2 mt by March 2011.
The Minister said extension of stock holding limit and substantial surplus sugar has depressed domestic prices below the cost of production, thereby leading to mounting cane arrears.
“If sugar prices are not stabilised and cash flow to mills are not improved, I fear that we will end up paying a huge subsidy to clear cane payment arrears of farmers,” he noted.
He observed that high cane arrears may lead to reduction in cane area in the coming years.
In Uttar Pradesh, the cost of sugar production is Rs 2,950 a quintal, while ex-mill price is Rs 2,800 per quintal. Similarly in Maharasthra, the cost of production is Rs 2,750 per quintal, while the ex-mill price is Rs 2,600 per quintal.
Highlighting the need to permit immediate export, Mr Pawar said that Brazilian sugar will be entering the market from May, “after which the price differential between Indian and the global sugar would not be conducive to exports’’.
According to industry body ISMA, sugarcane arrears till December 2010 stood at about Rs 4,000 crore.
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