Co-op mills pitch for cut in levy sugar obligation

The cooperative sugar industry has asked the government to amend its notification on procurement of levy sugar for 2011-12 to four per cent from 10 per cent to do away with carry-over obligation into the next year.

It also made a case for factory-wise fair and remunerative price for 2011-12 before the end of the first quarter of the season.

The National Federation of Cooperative Sugar Factories, a representative body of cooperative units, in its letter to agriculture minister Sharad Pawar and food minister K V Thomas also urged for removal of compulsory sugar packaging in jute bags.

According to the federation, the continuation of Jute Packaging Materials Act, 1987, enforcing 100 per cent compulsory packing of sugar and grains in jute bags, puts unnecessary financial burden on the sugar factories.

Federation sources told Business Standard the central government has notified the ratio between levy sugar and non-levy sugar obligation for 2011-12 at 10:90. The government usually requires 2.8 million tonne (mt) levy sugar for public distribution scheme (PDS) in a year.

"According to the stock position posted by the directorate of sugar, carry-forward levy obligation of previous seasons have been shown as 2.07 mt. It means the government required seven to eight lakh tonne from 2011-12 season. According to industry estimates, sugar production during 2011-12 would be 26 mt, which means the government required only 2.69 per cent to 3.08 per cent of the total sugar production in the current year for PDS. Therefore, there was a need for reduction in levy sugar obligation," sources said.

The federation said the levy sugar prices be notified well before the releasing of the order. According to the federation, the central government has started releasing levy sugar for PDS from 2011-12 season. However, it has not yet notified zone-wise levy sugar prices. Factories were already delivering levy sugar well below the cost of production which has increased the financial burden on the factories. The federation has demanded permission for export of sugar under open general licence.

Maharashtra co-operative
The cooperative sugar industry of Maharashtra has appealed to the state government to provide a subsidy of Rs 1,000 per tonne, especially when export is low due to falling prices. The Federation of Cooperative Sugar Factories in Maharashtra, which is a representative body of 170 mills, said sugar price in the global market was $643.9 per tonne. So far, about two lakh tonne has been exported from the state. Maharashtra till date has produced 8.3 mt of sugar compared to 7.6 mt during the corresponding period of last year.