Sugar import limit raised to 3 tonnes

The government has indicated to the sugar industry that it can import around three million tonnes of raw sugar this year instead of 1.8 million tonnes as was anticipated earlier.

This will not only keep the domestic prices in check, but also end the 2004-05 sugar year with a carryover stock of a three-month consumption requirement of 4.5 million tonnes.

"The sugar production scenario is looking up now and the availability is likely to remain comfortable for the rest of season, keeping the prices stable with a downward pull," Food Secretary SK Tuteja told Business Standard.

The sugar output has already exceeded 8 million tonnes in the past four-and-half months of the current crushing season. The total production during the season would almost certainly reach the comfortable level of 12 million tonnes, Tuteja added.

Even if raw sugar imports remained marginally below target at 2.7 million tonnes, the total sugar availability during the current season will be over 23 million tonnes, against the estimated requirement of 18 million tonnes.

This assessment is based on a modest domestic sugar production projection of 12.5 million tonnes and the estimated carryover from the previous season of 8.5 to 8.7 million tonnes.

"The best proof of ample carried forward sugar inventories is the fact that sugar mills are still selling last year's sugar and the sugar produced this year is mostly lying in their stocks," Tuteja said. Besides, the government had made an assessment of the carryover stocks of each factory, he said.

The sugar output is expected to rise further next year and the year after because of increase in cane plantings. "This would rule out any undue spurt in sugar prices," Tuteja maintained.

Sugar prices in the major consumption centres had breached the psychological Rs 20-a-kg mark in the first week of January.

This had prompted the government to announce further liberalisation of raw sugar imports and release an additional free-sale sugar quota of 4 lakh tonnes for the first quarter of 2005.

It had also announced conversion of unsold free sale quota into levy sugar at the end of every month to force the sugar mills to actually sell the entire quota and not horde it.

To encourage raw sugar imports under the advance license scheme, which requires mandatory re-export after refining, the government had extended the period for re-export from the earlier two years to three years. These measures had helped stabilise sugar prices at a reasonable level.