It expects supply to exceed demand in the current crop season, which ends in September.
The government will take a decision on lifting the monthly stockholding limits on sugar for traders by the end of August or early September, as it expects supply to exceed demand in the current crop season.
Official sources said an empowered group of ministers had recently decided to consider the issue within the next two months after the food ministry consulted with all ministries and departments concerned. The sugar crop season continues from October to September.
In March, the government had eased the stockholding limit for sugar from 200 tonnes to 500 tonnes per month. However, there has been a demand for lifting it altogether in view of increased sugar production in 2010-11 and a further increase expected in the coming crop season.
“The government estimates that sugar closing stock at the end of the 2010-11 crop marketing season in September will be around five million tonnes (mt), as consumption is estimated at 21-21.5 mt as against earlier the estimate of 22-22.5 mt. This leaves 1.2-1.7 mt of sugar as surplus,” said a food ministry official.
The country’s sugar production in the current season, which ends in September, is estimated at 24-24.5 mt. The figure is expected to go up to 26.5 mt in the next season, as planting of sugarcane crop for the new season has been five to eight per cent more, and there is a case for lifting the stock holding limit on sugar.
“However, as the validity of this order comes to an end in September, hence it would be appropriate to discuss the proposal for lifting the stock limit on sugar somewhere around August or September,” the official said.
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Among other things, the government is also considering easing the stock holding limit on paddy (de-husked rice), which was imposed in 2009 and thereafter extended for two years could also come to an end, as rice production in the 2011-12 crop year, which starts from July, is projected at 102 mt, up from 94.11 mt this year.
In case of rice, states have been empowered to impose stock holding limits and also determine the quantity.