Maha sugar co-op industry welcomes CCEA decision

The Rs 26,000 crore sugar industry of Maharashtra contributes to nearly 33% of India's total sugar output

The Rs 26,000 crore sugar industry of Maharashtra, which contributes to nearly 33% of India's total sugar output has welcomed CCEA's approval for sugar decontrol.

Vijaysinh Mohite-Patil, chairman, Federation of Cooperative Sugar Factories in Maharashtra, a representative body of over 170 mills, told Business Standard, "The government's move will benefit both the factories and sugarcane growers."

Mohite-Patil said the sugar factories have now got the relief from levy obligation under which mills were suppose to sell 10% of the total production at the concessional rate to the government for public distribution purpose.

"Now factories will earn more by selling that 10% quantity at the market rate," he added.

Federation as well as the Maharashtra government during their presentations to the committee led by C Rangarajan had contended that during sugar season the central government procures 10% of sugar production with prescribed price as levy sugar but prescribed prices were at very much below the open market price and the cost of production.

The Federation official informed that during 2011-12 crushing season, Maharashtra had produced 8.96 million ton of sugar and 10% levy obligation was .89 million ton. On account of this at an average levy price of Rs 1893 per quintal, the sugar factories incurred a loss of Rs 767.87 crore due to difference in average open market realization and levy price resulting into less payment of Rs 100 per ton for the cane.

Moreover, the cooperative sugar factories had pressed for the removal of sugar from Essential Commodities Act especially when the dominant consumption of sugar coming from the commercial segment. The Federation had also argued that all regulations on sale and distribution of sugar including release mechanism and stock holding limits on bulk consumers and traders should be dispensed with.

Yogesh Pande, president, Maharashtra Sugar Merchants & Brokers Association said that the long awaited move will strengthen the sugar industry which was thoroughly regulated for last 55 years. "The decontrol will remove the license raj legacy. Although it will not have any major impact on sugar price but the removal of levy mechanism will largely benefit the individual sugar mills which are currently bleeding due to fall in the sugar prices," he noted.