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Maharashtra government while welcoming Centre's decision on partial sugar decontrol insisted that it should remain in place for at least five years despite change in sugar price. Besides, in an interview with Sanjay Jog, the State Cooperation Minister Harshvardhan Patil, however, said sugar should be removed from the Essential Commodities Act.
Will the partial sugar decontrol help cooperative sugar factories in Maharashtra?
It will certainly benefit cooperative sugar factories. With the removal of 10% levy obligation individual factory will benefit at least by Rs 65-90 per quintal. The difference between the market price and the price at which factories had to meet the levy obligation was quite huge as they were incurring losses. But now factories can make good of losses as they can sale that much quantity at the prevailing market rate.
Are cooperative factories struggling to cope up with the rising mismatch between cost of production and ex-mill price competent enough to function in decontrol regime?
The fittest will survive. This apart cooperative factories will have to gain further skills and acumen to act based on the market conditions. Sugar market is not easy to handle and therefore those factories which will do proper planning and accordingly sale sugar will benefit. However, factories with laid back attitude will lose heavily. There are 202 registered cooperative sugar factories apart from about 70 private mills in the state. During the current season the sugar production is expected to around 8 million ton.
Factories are already reeling under financial burden due to low realization. However, those factories which read market well and carry out sale will benefit a lot. I sincerely feel cooperative factories will have to create a think tank to act swiftly in the decontrol environment.
What is your comment on the government's decision to do away with the release mechanism?
This is another positive for factories. During release mechanism it was binding for factories to sell the quota fixed by the government during the stipulated period. If they fail to do so there was every danger of conversion of that unsold quota into levy sugar quota. However, now factories can dispose of sugar either at one go or in parts depending on market conditions. Factories will now not be forced to sell the sugar below the cost of production as they get freedom to sell sugar taking into consideration the market conditions.
Can you give a guarantee to cooperative factories that the decontrol will not be revoked in the wake of surge in sugar price especially ahead of elections?
In fact, we want that the decontrol should remain in place at least for five years. It should not be revoked. Factories want that there should be consistency in the CCEA's decision on decontrol.
The Centre has not removed sugar from Essential Commodities Act which has been pressed by the state government and factories. Will it be pursued further?
The Essential Commodities Act (ECA), 1955 was enacted when sugar production was very less in comparison with the domestic demand. However, the scenario has undergone a change and there is no need for retaining the sugar in the ECA. Looking towards the competitive market in surplus period, controls are barriers for business activities of the industry. We will certainly pursue the issue with the Centre.
