The Indian Sugar Mills Association (Isma), the industry body representing private and public sector sugar mills in the country, has urged the government to allow export of around one million tonnes (mt) of additional sugar on the back of a higher stock level and estimates of a good crop season next year.
Earlier, the government had allowed export of 500,000 tonnes to check falling prices of the commodity in the domestic market. However, the association feels the opening balance for 2011-12 would be about six mt, which is one mt higher than the last year.
“Given that production is likely to be higher during the next crop year, there is an immediate need to reduce sugar stocks held with mills by allowing another one mt of exports,” said Narendra Murkumbi, president, Isma.
He also said the stock holding limit on traders should be removed for better price recovery. According to Isma, sugar mills are not able to recover the cost of production from present price levels.
“Due to surplus sugar in the country and stock holding limit on traders, the ex-mill sugar prices are below the cost of production,” he said. He also said sugar mills would not be able to pay farmers in this situation.
Isma has also appealed to the government to help deregulate the sugar industry by the abolition of the levy obligation on mills. “Levy sugar obligation disrupts normal market forces in the sugar industry. The government should procure sugar from the open market, rather than putting burden on mills,” Murkumbi said. The industry body also asked for abolition of the monthly regulated release mechanism which puts unnecessary stress as mills had to hold large stocks.
Referring to the ethanol blending programme, he said the government should finalise ethanol prices to bring clarity on policy.
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“The recommendation of which is now pending with them for over two months,” he said. According to Isma, the national biofuel policy that advocates 20 per cent ethanol blending by 2017 should be implemented soon, to benefit all stakeholders in the industry.
India is expected to produce around 24-24.5 mt of sugar in the 2010-11season (October-September) as against 19 mt last year. The domestic consumption is pegged at 22-22.5 mt in the current crop year.