With India's domestic sugar production in the 2008-09 season hitting a record decline, FMC banning futures trading in sugar, delayed monsoon and continued price rise, Mehul Dani speaks to the various stake holders of the sugar industry including the organizations who extend loans to sugar mills and cooperative factories and presents, on the eve of series of festivals, a picture which is certainly not rosy but gloomy and sour in taste.
~e Indian sugar industry has been on a roller-coaster ride 1 ~f highly fluctuating production during the past few years. The rising and faper the statement of Sharad Pawar, Minister of Agriculture, on 3] July, 2009 in Parliament, the production of sugar in the current 2008-09 sugar season is provisionally estimated in the range of 150-155 lakh tons as compared to about 263 lakh tons in 2007-08. The government has now decided to extend the terminal date for import of duty free raw sugar under Open General Licence (OGL) by sugar factories from] August 2009 to 31 March 2010. The import of raw sugar has also been opened up to the private trade up to 31 March 201 0 for being processed by domestic factories on job basis. Further, accelerated
release of processed sugar made from raw sugar would be allowed. The government had, in April 09, also decided to allow duty free import of white/refined sugar under OGL up to 10 lakh tons by
designated agencies, namely, STC, MMTC, PEC and NAFED till 1 August 09. This has now been extended up to 30 ovember 09.
Samir Somaiya, President, Indian Sugar Mills Association, New Delhi said: "Sugar production for the season 2008-09 may exceed ]47 lakh tones (against 264 lakh tons in the previous season). With the opening stock of sugar at 80 lakh tons, the total availability would work out to 227 lakh tons. Taking into account the present situation, additionally about 13 lakh tons of raw sugar has also been contracted, of which about 9 lakh tons has already arrived. Further contracts for purchase of raw sugar is also in the offing for later months to coincide with the crushing season for the incoming sugar season 2009-10. Therefore, the sugar supply situation would remain adequate to meet demand and prices are likely to remain steady as at present."
There are around 600 sugar manufacturing mills in India out of which 500 mills are in proper working conditions. ISMA has a strength of mCommodity market regulator Forward Markets Commission (FMC) banned futures trading in sugar in May until 3] December 2009 to arrest a possible speculation driven rise in prices. Sugar
Somaiya said: "Although India liberalized, the sugar industry remained heavily controlled and is still subject to the monthly release
mechanism for sugar sales that is determined and declared by the government of India. Millers must be free to determine the timing and quantity of their sugar sales, as is done by most other economic entities. This is the only
price, which was at Rs l8 to 23 on last October when the 2008-09 sugar season began, is ruling currently at Rs 28+ a kg in major citiesore than 200 member factories countrywide. Meanwhile, Uttar Pradesh is planning to privatize 24 economically unviable sugar mills (as their crushing capacity is low) before the new crushing season starts in October 2009. This year alone, worth over Rs 3,300 crores has been spent on import of 15 lakh tons of raw sugar and some quantities of white sugar. lling production has led to unprecedented policy problems and practical hardships to the tens of millions of consumers. India is the largest sugar consumer in the world and second largest producer of sugar.
~e Indian sugar industry has been on a roller-coaster ride 1 ~f highly fluctuating production during the past few years. The rising and faper the statement of Sharad Pawar, Minister of Agriculture, on 3] July, 2009 in Parliament, the production of sugar in the current 2008-09 sugar season is provisionally estimated in the range of 150-155 lakh tons as compared to about 263 lakh tons in 2007-08. The government has now decided to extend the terminal date for import of duty free raw sugar under Open General Licence (OGL) by sugar factories from] August 2009 to 31 March 2010. The import of raw sugar has also been opened up to the private trade up to 31 March 201 0 for being processed by domestic factories on job basis. Further, accelerated
release of processed sugar made from raw sugar would be allowed. The government had, in April 09, also decided to allow duty free import of white/refined sugar under OGL up to 10 lakh tons by
designated agencies, namely, STC, MMTC, PEC and NAFED till 1 August 09. This has now been extended up to 30 ovember 09.
Samir Somaiya, President, Indian Sugar Mills Association, New Delhi said: "Sugar production for the season 2008-09 may exceed ]47 lakh tones (against 264 lakh tons in the previous season). With the opening stock of sugar at 80 lakh tons, the total availability would work out to 227 lakh tons. Taking into account the present situation, additionally about 13 lakh tons of raw sugar has also been contracted, of which about 9 lakh tons has already arrived. Further contracts for purchase of raw sugar is also in the offing for later months to coincide with the crushing season for the incoming sugar season 2009-10. Therefore, the sugar supply situation would remain adequate to meet demand and prices are likely to remain steady as at present."
There are around 600 sugar manufacturing mills in India out of which 500 mills are in proper working conditions. ISMA has a strength of mCommodity market regulator Forward Markets Commission (FMC) banned futures trading in sugar in May until 3] December 2009 to arrest a possible speculation driven rise in prices. Sugar
Somaiya said: "Although India liberalized, the sugar industry remained heavily controlled and is still subject to the monthly release
mechanism for sugar sales that is determined and declared by the government of India. Millers must be free to determine the timing and quantity of their sugar sales, as is done by most other economic entities. This is the only
price, which was at Rs l8 to 23 on last October when the 2008-09 sugar season began, is ruling currently at Rs 28+ a kg in major citiesore than 200 member factories countrywide. Meanwhile, Uttar Pradesh is planning to privatize 24 economically unviable sugar mills (as their crushing capacity is low) before the new crushing season starts in October 2009. This year alone, worth over Rs 3,300 crores has been spent on import of 15 lakh tons of raw sugar and some quantities of white sugar. lling production has led to unprecedented policy problems and practical hardships to the tens of millions of consumers. India is the largest sugar consumer in the world and second largest producer of sugar.
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