Sugar industry fears new norms likely to bring back old restrictions

A section of the sugar industry fears that the new draft amendments to the nearly six-decade-old regulation regarding production, storage and pricing of sugar may bring back some of the controls that have been progressively brought down over the years. The industry players feel the new norms go against the Rangarajan Committee’s recommendations that proposed freeing the sector from some age-old regulations.

The Ministry of Consumer Affairs, Food and Public Distribution has come up with the draft ‘The Sugar (Control) Order, 2024', saying technological advancements in the production process have necessitated revamping of existing Sugar (Control) Order, 1966.

The National Federation of Cooperative Sugar Factories (NFCSF) has planned a national-level brainstorming session with all similar associations to discuss the draft and frame a joint response to it before the scheduled September 23 deadline.

 

Among the contentious points that the industry fears may bring back some control includes a provision that empowers the Centre to direct producers to package sugar in jute bags, sources said. Some industry players say this is in direct contravention of the recommendations made by the C Rangarajan Committee that called for a gradual phasing out of mandatory jute packaging for the sugar sector.

That apart, the draft was formed after merging the Sugar Control Order of 1966 and the Sugar Price Control Order of 2018. The latter (Sugar Price Control Order of 2018) empowers the Central government to fix the Minimum Sale Price (MSP) of sugar. “This to me is a welcome provision as it makes the Act now much simpler and easy to understand,” a senior industry executive told Business Standard.

The provision that empowers the Centre to ask for information in a digital format from sugar producers or dealers and requires them to integrate their digital systems with that of Centre for data authenticity and compliance would give the government updated real-time information on production of sugar and by-products such as ethanol and compressed biogas, he said, adding that it could also open the door for exploitation and misuse.

Sources said the provision that empowers the Centre to regulate the price of sugar has not gone down well with a section of the industry.

The draft says the Centre while issuing any order on the pricing of sugar for sale will take into consideration the Fair and Remunerative Price (FRP) plus the average and approximate conversion cost for the production of sugar from cane or beetroot and revenue realisations from by-products, they said. In the old method, interest and depreciation were included in other costs for the calculation of sugar pricing which has been supposedly done away in the new draft.

The draft also states that FRP will be taken into consideration for issuing any order on the pricing of sugar by the Centre, putting those mills that follow the state-fixed Advised Price (SAP), which invariably is higher than FRP, at a disadvantage. These include mills from UP, Haryana, and Punjab, among others.

Among the points that the industry feels are laudable include bringing the unorganised ‘gur’ and ‘khandsari’ sectors under the ambit of the sugar control order which will streamline their access to sugarcane.

However, they also feel that another provision that brings under the Control Order any other alternative product affecting sugar production from sugarcane could jeopardise new product development. The first-ever definition of different grades of ethanol is noteworthy, a senior industry player said.
 

Mapping Challenges

> Industry fears draft empowers Centre to enforce mandatory jute packaging 

> Development of new products  may suffer if too many curbs are imposed, says industry

> Joint meeting of all associations to be convened to form a common response before September deadline