Sugar mills cry foul

In a far-reaching decision in April this year, Cabinet partially deregulated sugar sector and abolished levy mechanism

Six months after the government partially decontrolled the sugar sector, millers have alleged they are still being forced to carry the burden of supplying sugar at a subsidised rate to the government for the Public Distribution Supply (PDS), in contravention of the spirit of the Cabinet decision.

In a far-reaching decision in April, the Cabinet had partially deregulated the sector and abolished the levy mechanism, whereby millers were required to compulsorily sell a portion of their produce at a cheap rate to the government for sale through PDS.  

However, to ensure supply  through ration shops did not stop, the government allowed states to purchase sugar directly from the market and compensated them for the same.

For millers, it said they would not be required to supply any sugar produced after September 1, 2012. In other words, the mechanism was removed from the 2012-13 sugar marketing season. The sugar season runs from October to September.

However, to stabilise the new system of selling sugar for PDS, mills were directed to continue providing sugar to the government in the interim till March 2013.

Millers alleged that despite the expiry of the extension, they were still being asked to supply some sugar which the government could not lift in the 2011-12 sugar season.  

This, called as an 'obligation', is in contravention of the cabinet decision which categorically said that millers would not have to provide any sugar to the government from the 2012-13 sugar season.

“In some cases, the sugar demanded by the government is as small as 5 quintals or 3 tonnes, which does not even fill a truck,” the Indian Sugar Mills Association said in a letter sent to Food Minister K V Thomas.

Some government officials said they were well within their right to demand sugar from mills because they had to fulfill their unsold obligation.

“This has to come to an end because the government cannot direct us to supply sugar for PDS sale for an indefinite period of time, when already the system was dismantled in April,” a senior industry official said.

India's sugar production in the 2012-13 crop marketing season that ended in September was estimated to be 25 million tonnes, while in the 2013-14 season that started from October 1, it is expected to be slightly more.