Government to hike levy sugar rates

After the recent breather on exports, sugar mills will soon have another cause for cheer. The government is going to revise the price of levy sugar upward for the 2006-07 sugar season (October-September).

Under the existing sugar policy, 10 per cent of the sugar produced by factories is requisitioned by the government as compulsory levy at a price fixed by it in every sugar season for distribution in the public distribution system (PDS).

"The recommendation from the finance ministry's cost and audit branch on revision is expected to come in a week or so", said a senior official of the food ministry. Based on this, the government would declare the revised levy price. He, however, denied having more details on this.

This would bring some good revenue to the sugar industry. According to C S Nopany, chairman and managing director of the Oudh Sugar Mills, the price of levy sugar has not been revised since 2003-04 season and both for 2004-05 and 2005-06 season, the government has bought sugar at old rates. With revision, the difference would be paid by the government.

In 2004-05, the government bought about 13 lakh tonne sugar at levy price and in 2005-06, it bought about 19 lakh tonne. In the current season, about 23 lakh tonne sugar is likely to be bought.

The revision of levy sugar price will also improve open market rates, said Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories.

The official also added that mills with export obligation under the advance licence scheme have sought export permits for 70,000 tonne of sugar.

Of this, permits have been issued for about 35,000 tonne. He also added that the government has not set up an upper limit for sugar exports outside the AL scheme and companies can export as much as they can.