The government may allow further exports of sugar in the next few days, a move that may help the UPA in the upcoming Assembly elections, particularly in Uttar Pradesh, the largest sugarcane-producing state in the country.
“The Food Ministry will be moving a proposal next week for convening of the Empowered Group of Ministers (EGoM) on Food, headed by Finance Minister Pranab Mukherjee,” a source said. In November, the government had approved the export of one million tonnes of sugar in the 2011-12 marketing year, which started from October, 2011.
Sources said there is scope for allowing more sugar exports as domestic production is expected to exceed demand and global prices have also started firming up. However, the government may have to seek permission of the Election Commission for the move as the Model Code of Conduct is already in operation.
The move may help the Congress in Uttar Pradesh, where around 130 mills contribute 25-30 per cent of the country’s sugar production and pay Rs 16,000 crore to cane farmers every year.
There is a feeling in the Food Ministry that the finances of the sugar mills can be improved by allowing more exports. With a healthy bottom line, the mills would be able to ensure timely payment to sugarcane growers.
Ahead of the polls, UP Chief Minister Mayawati had announced a hike in sugarcane prices by Rs 40 to a maximum of Rs 250 per quintal for the current 2011-12 marketing year (October-September) at the state level.
The Centre has fixed the Fair and Remunerative Price (FRP) of sugarcane at Rs 145 per quintal for the current season. Five states, including UP, announce a minimum support price for cane, which is usually higher than the FRP that mills have to pay to cane growers.
The government has pegged sugar output at 24.5 million tonnes in the 2011-12 marketing year, higher than the estimated annual demand of 22 million tonnes. The sugar industry has estimated 25 million tonnes of production during the year.
