Maha sugar coop plans to set up pool for sugar supply needed for PDS

Keen to enter into MoU for timely and quality sugar supply saving transportation cost

Maharashtra sugar cooperatives propose to form a pool to supply sugar required by the state government for public distribution scheme (PDS). This initiative comes in the wake of Centre's decision to do away with the levy obligation. Yearly requirement of state is 1.7 million tones.

 

The proposal to set up pool was discussed at the meeting convened by the Federation of Cooperative Sugar Factories in Maharashtra on Tuesday. Federation is expected to take up its proposal with the state government with a plea to enter into the memorandum of understanding (MoU).

 

Federation, which is currently headed by former minister Vijaysinh Mohite-Patil, is a representative body of over 170 sugar cooperatives in the state. Maharashtra contributes over 30% to the national sugar output.

 

Sanjeev Babar, managing director, Federation of Co-operative Sugar Factories in Maharashtra told Business Standard "The objective is to get market rate for cooperatives, supply quality sugar, reduce transportation cost and ultimately help government to reduce expenses incurred on procurement of sugar. Federation is keen to enter into MoU with the government for the pool mechanism.''

 

Babar said if the Maharashtra government agrees to pool mechanism for procurement of sugar needed for PDS it can be replicated in non producing sugar states. He informed that the state government has yet to float any tender for the procurement of sugar needed for PDS.

 

A cooperative sugar factory chairman, who did not want to be named, recalled that  after the Centre's decision of partial sugar decontrol taken in April this year, the mandatory obligation on millers to give 10% of early production for PDS was withdrawn. Millers had to sell 10% sugar under levy obligation at Rs18.50 per kg which was much below production cost.

However, the Centre has kept a cut off price of Rs 32 per kg and indicated that a subsidy will be provided to respective states if the sugar price exceeds Rs 32 per kg.'' He clarified that Federation has proposed pool mechanism but it is also prepared for tender process.

 

Yogesh Pande, founder president, Maharashtra Sugar Merchant & Brokers Association said ''If all states go in for the timely purchase of sugar for PDS, it will reduce burden on sugar millers and liquidate sugar stocks. This will ensure price stability whereby sugar prices have been falling consistently for past six months from Rs 3200 per quintal ex mill to Rs 2800 per quintal for S/30 grade.''

 

Meanwhile, as per the preliminary estimates, Maharashtra is expected to produce 6.6 to 7 million ton of sugar after crushing 61 million ton of sugarcane during crushing season 2013-14.  This will be lower compared to the 2012-13 season when 70 million ton sugarcane was crushed to produce 8 million ton sugar.