Sugar deficit to go on for another year: Pawar

Output in 2009-10 to be 15-16 mt against projection of 30 mt.

Food and Agriculture Minister Sharad Pawar made it clear here today that India would continue to face a sugar deficit for another year.

He said cooperative and private mills, as well as various state governments, had provided wrong estimates for production. Against the projections of 30 million tonnes of production in 2009-10, India is expected to produce only 15-16 mt, he said.

However, the present firmness in the sugar price would remain for a year, after which the rise would correct itself, he said. Currently, the price of raw sugar in the global market has reached $707 per tonne FOB and white sugar is at $670 per tonne.

He was speaking at the annual general meeting of the Federation of Cooperative Sugar Factories in Maharashtra, a representative body of over 170 mills in the state.

About 5-6 mt is required to be imported, he noted. Of this, 4-4.5 mt of import agreements have been entered into by millers. This comprises 3.8 mt of raw sugar and and 0.7 mt of white sugar. The Centre has already declared import duty exemption, levy exemption and accelerated release facility on imported sugar.

He asked cooperative and private mills to provide better estimates. India is now expected to produce 21.5 mt of sugar in 2010-11.

Pawar also criticised cooperative mills for inaction in importing raw sugar. He asked them to pay more attention to raising productivity per hectare. Maharashtra's sugarcane production is 60 tonnes per hectare, compared to 105 tonnes per hectare in Tamil Nadu.

Pawar also criticised the co-op mills for taking an allegedly rigid stand on the order for 5 per cent ethanol blending with petrol. State-run oil marketing companies have proposed to procure ethanol at Rs 27-28 per litre, keeping that rate fixed for three years. Pawar said mills would lsoe by not coming forward, as they have already created ethanol manufacturing capacity of 580-million litres in the state.

Federation sources told Business Standard the ethanol rate of Rs 27-28 per litre currently looks unattractive compared to the rates for molasses (Rs 4,500–5,000 per tonne) and rectified Spirit (Rs 26–28 per litre). However, these latter two rates are expected to come down.