Sugar producers seek reduction in levy quota

With India’s sugar production estimated to be 20 per cent higher than the initial projection of 15 million tonnes, the sugar industry has asked the government to bring down the levy quota to 15 per cent for the current season.

The industry, through its associations, the Indian Sugar Mills Association and the National Federation of Cooperative Sugar Factories, met Union Food Minister Sharad Pawar earlier this week.

The present levy quota is 20 per cent. Levy sugar has to be sold to the government at a price decided by the government for sale under the public distribution system (PDS).

The quota, which was 10 per cent (of the total sugar produced by a mill) in the last sugar season (October-September), was raised to 20 per cent due to a dip in sugar output.

Mills can sell the remaining 80 per cent, known as free-sale sugar, in the open market according to the government’s release mechanism.

“We have requested the minister to review the levy quota for the season as output is now projected at about 18 million tonnes,” said Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories.

At 20 per cent quota, on production of 15 million tonnes, three million tonnes would be available for the PDS. Now, this will go up to 3.6 million tonnes.

Annual PDS demand is estimated at 2-2.5 million tonnes.

At present, the levy price is between Rs 1,275 and Rs 1,383 a quintal (100 kg) in Uttar Pradesh, the country’s second-largest producer.

In Maharashtra, the largest producing state, the price is between Rs 1,318 and Rs 1,344. However, the open market realisation is Rs 3,000-3,100 a quintal.

The industry bodies have also sought a reversion to monthly sale and dispatch of free-sale sugar. The government has asked mills to sell sugar according to a weekly release mechanism. Kumar said the weekly release mechanism had brought down ex-mill sugar prices by Rs 1,200 a quintal to Rs 3,000 a quintal.

“Although the ex-mill price has fallen, the retail price has not come down correspondingly and consumers have not benefitted much. At the same time, the fall in realisation has started affecting payments to farmers,” he said.

The industry has also sought an increase in the duration of stock-holding limits on bulk consumers to three months from 10 days at present.

It has also sought an import duty on sugar (both raw and white) to check any surge in imports due to lower international prices.