Indian sugar mills association

PDS sugar: Talks soon on ending mills obligation

Date:	22 Dec 2011

Source:	The Business Line

Reporter:	BL Bureau

News ID:	788

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New Delhi, Dec. 21: The Food Ministry plans to discuss with States, the Finance and Agriculture Ministries on removing some of the controls such as doing away with the mandatory obligation to offer sugar for the public distribution system (PDS) in the New Year, said Food Minister, Prof K.V. Thomas on Wednesday.

He was speaking to reporters after addressing the 77 {+t} {+h} Annual General Meeting of the Indian Sugar Mills Association (ISMA).

The industry has been demanding removal of controls such as the obligation to supply 10 per cent of output for the PDS at discounted price to the Government for public distribution system and also the monthly regulated mechanism by which each mill is told how much to sell every month.

“We have to look into the financial implications and need to discuss the issues in detail,” he said.

Consensus needed

As decontrol involves a large number of stake-holders – from farmers, the sugar mills, the State Government to the consumers, a consensus need to be arrived at the issue, Mr Thomas told the AGM.

The recent removal of stock holding limits on bulk consumers should help improve the sugar off take in the domestic market, Mr Thomas said.

He also urged the State Governments to consider the impact on the sustainability of sugar sector before announcing radical increases in cane prices as the wide disparity between cane and other crops may also adversely affect the food security of the country.

On the industry demand for a cane price formula, wherein the cane pricing would be fixed in relation to the prices of sugar and its by-products, Mr Thomas said the issue is under examination by the Economic Advisory Council to the Prime Minister.

Requesting decontrol of the sugar sector, the ISMA President, Mr Narendra Murkumbi, urged the Minister to allow further exports at the earliest, a move that would help the industry meet its cash flows during the crushing season when the fund requirement to pay the farmers is the highest.

Such a move would also help the exporters take advantage of global prices, which are higher than domestic prices, but are on a downward trend and are likely to fall further.

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