New Delhi, Sept. 16:
The Government should look at creating a sugar buffer stock of two million tonnes to balance the market, said Ashok Gulati, Chairman, Commission for Agricultural Costs and Prices (CACP).
Addressing the 5th Kingsman Sugar Conference, Gulati suggested that buffer stocks could be built during the surplus production years and be released during the lean period to stabilise the market.
Creation of a buffer is also expected to help the Government deal with sugar production cycle.
With sugar production exceeding domestic consumption for the third year in a row for 2012-13, the opening stocks for the new crushing season starting October are expected to be over 8.5 million tonnes, about 20 per cent more than the normal opening balance that the Government would like to have at the start of the crushing season.
Millers in the country are already reeling under the impact of rising production costs as cane price, fixed by the State Governments, is higher than sugar price.
Cane arrears at the start of 2013-14 season are expected to be around Rs 2,500 crore.
Gulati said the Government needs to build a buffer in the context of falling sugar prices or else it may lead to fall in cane acreage and hit the sugar production in coming years.
He also said that farmers in Maharashtra and Karnataka have reduce consumption of water to grow cane and have made it more sustainable by adopting drip irrigation among other measures.
Food Secretary Sudhir Kumar said the Government is not considering any move to create a buffer.
He said that the fluctuation in sugar sector has come down after the Government implemented a partial decontrol last year by doing away with the levy mechanism and freeing up the sales for millers.
The sugar industry demanded that the Government remove curbs on exports by relaxing the current set of norms as prospects brighten for shipments of raw sugar in new crushing season starting October.
At present sugar exports are under open general licence (OGL), but the exporters have to register their shipments with the Director General of Foreign Trade.
The compulsory registration of exports was aimed at keeping a tab on shipments and regulate them, if necessary.
Sudhir Kumar said his ministry would look into the demands of relaxing the sugar export registration procedures as demanded by the industry.