"...though some of the measures taken by the Government may provide some respite to the ailing sugar industry in the short-term, the real turnaround of the industry will depend much on the full implementation of a National Sugar Policy," said Vellayan, while addressing E.I.D Parry's shareholders at Chennai today.
He noted, the policy must enable sugar pricing to be linked to the market price of sugar and by products, stabilise sugar prices through a common stock mechanism, enhance cane production through public-private R&D partnerships, progressively increase ethanol blending in petrol to atleast 10% and allow mills to export power on open access basis.
Some of the measures which the Centre announced to revive sugar industry, includes in December 2013, the Cabinet Committee on Economic Affairs cleared the norms for Rs 6,600 crore of interest-free loans to the sugar industry to enable the sugar manufacturers to pay off sugarcane arrears to farmers. Under this scheme, interest subvention upto 12% or at actual rate charged, whichever is less was provided to sugar mills for five years.
Vellayan further said the company is also in discussion with the state government of Tamil Nadu and is hoping for an earlier resolution to the vexing problem of cane price fixation.
"The industry clearly need a permanent solution to the cane price fixation. A revenue sharing formula on the lines of recommendations of Rangarajan Committee will be a win-win for the farmers and the industry in the long run," said Vellayan.
On the outlook for the sugar industry, he said noted according to the Food and Agriculture Organisation (FAO) estimatee the World sugar production at 180.2 million tonnes for 2013-14 season, with near flat growth over previous season.
With a net surplus situation, the international sugar prices remained muted. India also had a similar pattern with supply outpacing demand resulting in surplus stock situation. The industry was looking at export opportunities but found in economically unviable. Considering the lower import duty structure on sugar coupled with unrealistic cane price announced by some of the state governments not in sync with the realisation, there was no on exports. With muted sugar prices in the domestic market and unviable exports, the industry faced a severe liquidity crisis resulting in mounting cane price arrears," said Vellayan.