The Centre may allow Uttar Pradesh millers to sell imported raw sugar in other states, since it has failed to persuade the Mayawati government to lift ban on the commodity’s entry to UP.
With this move, the food ministry wanted to improve availability of sugar in the market and fight price rise, said a source. About 900,000 tonnes of raw sugar contracted by the UP mills are stuck at the ports for two months. UP is the second biggest sugar producer after Maharashtra and home to companies like Bajaj Hindusthan and Balrampur Chini, which, along with Simbhaoli and Dhampur Sugars imported raw sugar, mainly from Brazil, under the duty-free scheme.
The Centre’s decision is also likely to help the companies make decent margins by selling sugar in other states. Raw sugar has been contracted at a price ranging from $520-550 per tonne. At the current international prices, the landed cost of a tonne of raw sugar is $690-700. The UP government early November banned entry of raw sugar into the state to aid the farmers to get better cane prices. This fuelled price rise and caused wholesale sugar to touch a record Rs 4,200 a quintal. Currently, millers importing raw sugar can’t sell it to others since import is allowed on actual-user basis.
A request to UP by Union Food Minister Sharad Pawar to withdraw the ban failed to yield any results. “We could have processed 250,000 tonnes of raw sugar, which would have increased its availability in the market,” rued a UP miller.
The Centre allowed duty-free import of raw sugar to tide over the shortfall in domestic production. In the 2008-09 season ending September, domestic sugar output fell 42 per cent to 15 million tonnes, causing retail sugar prices to more than double. Sugar in retail sells at Rs 45-46 a kg. Its annual consumption is estimated at 23 million tonnes. It has a high weightage of 3.62 per cent in the wholesale price index.