Sept sugar quota deadline not to be extended

The ministry of consumer affairs, food and public distribution has decided not to extend the deadline for sale of non-levy sugar quota for September. Officials said letters have been sent to the national federation of sugar and the Indian Sugar Manufacturer Association (Isma).

The ministry, on August 31, announced release of 1.9 million tonnes (228,000 tonnes of levy and 1.672 million tonnes of non-levy for September). Industry sources believe they will be able to sell the entire allotted quantity within the stipulated time due to rising festival demand.

“This means the non-levy quota ( free sale) of sugar of September 2010 has to be completed before the end of the month. Even if there are representations to extend the deadline, it is not desirable following the expected increase in demand in the festive season,” explained the official.

The ministry had extended the deadline for sale of non-levy quota of sugar for August till September as lower price of the sweetener restrained mills from releasing the allotted quota before the deadline of August 31. The government had allotted 1.92 million tonnes sugar for August.

According to the current norm, non-levy quota, if not released within the deadline becomes levy sugar which mills are bound to sell at Rs 13.50 a kg resulting into huge losses for the companies.

The government has been following a policy of partial control and dual pricing for sugar under which a certain percentage of sugar produced by factories is to be sold at a price fixed by the government in every sugar season for distribution under the Public Distribution System (PDS).

The non-levy (free sale) sugar is allowed to be sold according to the quantity set by the government under the free sale sugar release mechanism.

The government has also taken steps for decontrol of the sugar industry.

Accordingly, the compulsory levy obligation of sugar factories has been gradually reduced from 40 per cent to 30 per cent from January 1, 2000. With effect from February 1, 2001, the compulsory levy obligation has been further reduced to 15 per cent. The levy obligation has been 10 per cent of the production since March 1, 2002.

India’s sugar output is estimated to touch 19.5 million tonnes in the 2009-10 marketing year ending September as against 14.7 million tonnes in the previous year.