The co-operative sugar industry has sought the central government's intervention with a plea to amend its notification of procurement of levy sugar out of 2011-12 sugar season to 4% from 10% so that there is no carry over sugar obligation into 2012-13 sugar season. Besides, it has made a case for factory-wise fair and remunerative price (FRP) for the season 2011-12 before the end of the first quarter of the season.
The National Federation of Cooperative Sugar Factories, which is a representative body of co-operative units in the country, in its letters to agriculture minister Sharad Pawar and food minister KV Thomas also called for the removal of compulsory sugar packaging in jute bags. According to the Federation, the continuation of Jute Packaging Materials Act, 1987, enforcing 100% compulsory packing of sugar and grains in jute bags, is an unnecessary financial burden on sugar factories. About 60% sugar was consumed by the bulk consumers and these jute bags were not acceptable to them because sugar as traces for batching oil used for softening jute and loose fibres were found in jute bags.
Federation sources told Business Standard the central government has notified the ratio between levy sugar and non-levy sugar obligation for 2011-12 as 10:90. The government usually requires about 2.8 million ton levy sugar for public distribution scheme (PDS) in a year. "As per the stock position posted by Directorate of Sugar, carry forward levy obligation of previous seasons have been shown as 2.07 million tonnes. It means government required around 700,000 to 800,000 tonnes from the season 2011-12. As per the industry estimates, sugar production during 2011-12 would be around 26 million tonnes which means government required only 2.69% to 3.08% of the total sugar production in the current year for PDS. Therefore, there is a need for reduction in levy sugar obligation," sources said.
Further, the Federation has emphasised that levy sugar prices be notified well before the releasing of levy sugar order.
According to the Federation, the central government has started releasing levy sugar for PDS from 2011-12 season. However, it has not yet notified zone wise levy sugar prices. Factories were already delivering levy sugar well below the cost of production which has increased the financial burden on the factories.
The Federation has demanded permission for export of sugar under open general licence (OGL). "Even after taking into consideration the rquirement of around five million tonnes of sugar for meeting the domestic demand of the initial three months of 2012-13, the country will have a surplus of 3.57 million ton of sugar. If the surplus is not taken care of, it will lead to a financial crisis which will be worse that what industry faced in 2008-09 and 2009-10 because of the mismatch between the sugarcane price payable and cost of production. Thus it is very essential that the country exports at least 3.5 million tonnes more of sugar, " it noted.
INDUSTRY SEEKS SUBSIDY FROM MAHARASHTRA
Cooperative sugar industry in Maharashtra has appealed to the state government to provide a subsidy of Rs 1,000 per tonne especially when sugar export was taking place at a low level due to falling prices. The Fderation of Cooperative Sugar Factories in Maharashtra, which is a representative body of more than 170 mills, said hardly any export was taking place from the state. Currently, the price of sugar in the global market is $643.9 per tonne. So far about 200,000 tonnes have been exported from the state. Maharashtra till date has produced 8.3 million tonnes of sugar compared to 7.6 million tonnes during the corresponding period of last year.
