Sugar losses rise as unsold stocks pile up

The sugar industry suffered net financial loss of about Rs 5,380 crore in 2002-03 on account of over-production and low price realisation.

Of this, loss of nearly Rs 1000 crore was on account of interest on the inventory carrying cost.

The average cost of sugar production during the year was Rs 13,500 a tonne. Price realisation was Rs 11325 a tonne. This caused loss of Rs 2175 per tonne.

In the preceding year, loss on a tonne of sugar was Rs 1308 with average realisation of Rs 12,633, the National Federation of Cooperative Sugar Factories (NFCSF) president M R Desai said today in his presidential address at the NFCSF annual general body meeting.

Desai said the industry has been facing problems for four years in a row, resulting in several units turning sick.

Non-lifting of levy sugar by government agencies and delay in payment of buffer subsidy added to the sector's problems.

Closing stocks of sugar rose from 9.47 million tonnes in 1999-2000 to 11.6 million tonnes at the end of 2002-03 season. Total sugar output in 2002-03 was 20.14 million tonnes, against estimated consumption of 18.5 million tonnes.

Desai criticised the government's sugarcane pricing policy. Though statutory minimum price (SMP) was initially fixed at Rs 64.50 a quintal for the 2002-03 season, it was hiked subsequently to Rs 69.50 a quintal despite decline in sugar prices during the year.

He suggested a rational and market-driven relationship between prices of sugarcane and sugar. Cane prices should be on cost-plus basis.

Desai pointed out states were reluctant to avail of financial packages announced by the Centre for clearance of cane price arrears because of the condition requiring states to pledge that they would not announce state advised prices in future.

Agriculture minister Rajnath Singh said he and food minister Sharad Yadav may sit with industry representatives to discuss ways to help the sector.