Sugar exports on hold as ministries spar

Food ministry wants clarity on cane production and yield numbers before allowing exports.

Divergent views between the food ministry and agriculture ministry over the production and yield numbers are holding up the export of 500,000 tonnes of sugar under the open general licence (OGL), despite the industry pressing for it in the face of huge losses and mounting arrears of Rs 4,000 crore to farmers till end of December.

OGL is a permit the government gives to mills to export sugar, without any restrictions and conditions.

The food ministry has sought a clarity on the sugarcane production and yield numbers before allowing exports, while the agriculture ministry wants exports to be allowed.

The exports, which were announced by the then Food and Consumer Affairs Minister Sharad Pawar in December, have yet not been cleared because of concerns over rising inflation.

Officials said, an empowered group of ministers to whom the matter was referred, has asked for inter-ministerial consultations before the exports of 500,000 tonnes of sugar is finally okayed.

A draft note for the same was circulated among all the concerned departments and ministries for consensus.

Meanwhile, the food ministry is banking on its third meeting with the state sugarcane commissioners to come up with a final production estimate for the 2010-2011 crop marketing season. The second state-wise sugarcane output estimates given by the cane commissioners were different from the second advanced estimates of the agriculture ministry.

“Though, there was not much difference in the overall cane production (which showed a rise in both the cases), but it was the wide variance in the state-wise cane production and per hectare yield numbers between the agriculture ministry and cane commissioners which raised concern,” officials said.

In some big states like Maharashtra, the agriculture ministry’s sugarcane production and per hectare yield estimates were 20-30 per cent more than that provided by the sugarcane commissioners.

The food ministry is now waiting for a clarity on the inter-state variance in the sugarcane estimates and the per hectare yield from the agriculture ministry before forming a final view on when to approach the empowered group of ministers again.

The meeting of sugarcane commissioners in Delhi on March 4, kept the official production numbers unchanged from the previous estimates of 24.1-24.5 million tonnes for 2010-11. Output in 2009-2010 was estimated to be 19 million tonnes.

Officials said the food ministry and agriculture department are holding regular consultations to sort-out the differences before finalising the draft to be sent to the EGoM.

Meanwhile, the sugar industry on Thursday demanded that the government should allow immediate export of sugar while reiterating its demand for removal of two critical controls — the levy obligation and release mechanism.

In a joint press conference held here, Indian Sugar Mills Association (Isma) and National Federation of Cooperative Sugar Factories (NFCSF) said the step will cut down the losses of industry and lead to timely payment to farmers.

“Since January, almost all sugar mills have been selling sugar at a price that is below the cost of production and are incurring loss of Rs 150 a quintal. This is unfortunate, since there is an opportunity to export surplus sugar as the global prices are high by Rs 500 a quintal,” Narendra Murkumbi, president of ISMA and managing director, Renuka Sugars said.

In the second-biggest producing state Uttar Pradesh, cost of sugar production is Rs 2,950 a quintal, while the ex-mill price is Rs 2,800 a quintal. Similarly, in Maharasthra, the biggest producing state, the cost of production is Rs 2,750 a quintal, ex-mill price is Rs 2,600 a quintal.