EGoM to meet again on sugar export

Nearly three weeks after the decision on export of another million tonnes of sugar, the modalities are to be decided by the same Empowered Group of Ministers (EGoM), as differences between ministries of the food and agriculture delay notification of the decision.

In its communication after the March 26 decision, an EGoM note asked the food ministry to finalise modalities, keeping in view the ‘principles of equity and transparency’. This implied a continuation of the previous system of issuing mill-wise quota for export but was different from the first come, first served system the EGoM had discussed. A change to the latter would have benefited mills located near coastal areas but impacted those in the northern states that do not export but were able to make some margin under the previous system, by selling their export quotas.

After the minutes of the EGoM meet came to the food ministry, agriculture minister Sharad Pawar wrote to finance minister and EGoM head Pranab Mukherjee, pointing to a discrepancy between the discussion and the actual minutes. Meanwhile Uttar Pradesh-based companies such as the Birlas, Dwarikesh, DCM Shriram, etc, objected to a possible change to a first come, first served system.

Food minister K V Thomas maintained the system of mill-wise quota would continue. But his ministry then decided to seek Mukherjee’s approval on details of the suggested ‘principles of equity and transparency’. “The finance minister did not decide on the issue and on Friday decided to take it back to the EGoM, so that a unanimous decision is taken on modalities,” said a person close to the development.

The EGoM is expected to meet next week.

This will be the first time an EGoM decision would go back to it for working out modalities to their decision, said the person. The proposed change in system of export did not merely create differences between the ministries of agriculture and food but also divided the industry. While southern/western companies batted for a first come, first served system, contending a quota system slowed shipments, northern companies argued a change would lead to losses for them and delay payments to cane farmers.

Industry officials said this confusion would cost them dearly, as the world’s biggest sugar producer, Brazil, was set to begin production in less than a month and this would put pressure on export realisations.