Sugar Traders Demand Increase In Stock Limit

India's production surpassed Brazil's output by 33 per cent. The higher sugar production was attributed to several favourable factors like an increase in sugarcane production to 290 million tonnes in the current season from 260 million tonnes in 1994-95, crushing incentives to factories in the form of additional free-sale sugar quotas, purchase tax concession and transport subsidy in certain states.

Besides, it was also due to an increase in the statutory minimum sugarcane price (SMP) to Rs 425 per tonne from Rs 391, advance announcement of SMP for the year 1996-97 at a rate of Rs 459 a tonne, easy loans at lower interest rates for sugarcane development from the Sugar Development Fund, export quotas of 10 lakh tonnes and a creation of buffer stock of 5 lakh tonnes.

According to Mohan Gurnani, president of the Sugar Merchants' Association, in view of the record production, there was no need for imports from abroad as was the case in 1993-94 and as was proposed in 1994-95 when precise production estimates could not be made in the initial period of the season.

On the other hand, 10 lakh tonnes has been allowed to be exported through the Indian Sugar & General Export Import Corporation (ISGEIC), the canalising agency, of which about 8.50 lakh tonnes has been exported so far. Of this, about 2 lakh tonnes was exported to Pakistan.

Sugar market prices during the year ruled more or less steady with marginal variations caused due to the demand and supply forces. Apart from increase in releases, the stock limit was also enhanced.

Recognised wholesale dealers could now hold 500 quintals from the earlier 250 quintals introduced in April last year. Also the turnover period was increased to 15 days in place of the 7 days earlier.

Traders demanded that it was high time that the stock-limit was increased to 1000 quintals, if not more, for a city like Mumbai with a sizeable urban population and a high consumption propensity.

The early release of the weekly sales and despatches by sugar factories of around 20 per cent and fortnightly sales of around 40 per cent have also had a healthy effect on market prices.

The government has taken a right decision to decanalise sugar exports and thereby free the same from the monopolistic stranglehold of a single agency i.e. ISGEIC. This has been done in the face of vehement opposition from the sugar industry.

The government move was promoted by a decline in global sugar prices. The industry was of the opinion that with the entry of many private parties exports would no longer be viable in case of a drop in prices

It is reported that STC, MMTC and other agencies will now enter the sugar export trade with preferential export quotas to the US and European Union in order to fetch higher prices. However the industry insists that preferential export quota to the US and the European Union should be reserved only for the ISGEIC.

According to traders, the entire exports, whatever may be the quantum, should be thrown open to the private trade disregarding the apprehensions raised. The industry fears this may lead to unhealthy competition and cutting down of the factories' realisations from exports.

Gurnani urged sugar merchants to enter the export trade. The amendment to the Sugar Export Promotion Act and the order or notification implementing the decanalisation decision and laying down the procedure to be followed for exporting sugar by interested parties, is eagerly awaited.

The sugar trade has been pleading for the decontrol of prices and distribution, keeping intact the monthly release mechanism, creation of a buffer stock of about 10/15 lakh tonnes and the notifying of a statutory minimum sugarcane price as per the recommendations of the Commission for Agricultural Costs and Prices.