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The
Indian Sugar Industry is passing through a difficult period arising
essentially out of a mismatch between sugar cane prices and sugar
prices. The sugar cane
price has increased sharply having risen by approximately 16% in the
last two years, while sugar price has declined by 20% in this
period.
Around
the world, the earnings from sugar sales are shared between the
mills and the farmers in a fixed ratio.
A great many countries give subsidies to farmers, frequently
disguised as loans which are never recovered, when sugar prices are
low.
India
needs to switch to such a model.
Otherwise,
we will continue to have huge swings in sugar cane production
leading to long delays in paying farmers for their sugar cane when
prices are low, which leads to drastic reduction in sugar cane
planting.
As
a matter of fact, the Indian Sugar Industry is among the most
efficient in the world. In
spite of having the highest sugar cane prices as compared to any
major sugar producer, our sugar is the
cheapest in the world market.
India
is 2nd largest producer of sugar and largest consumer of sugar.
India is becoming recognized around the world as a major
source of technology.
We
are also among the most diversified in the world.
India is a global leader in the cogeneration of power and
today the industry supplies 1,300 MW to the grid with another 500 MW
in the process at present. The full potential is 7,000 MW.
We need fine tuning in Government policy with regard to
matters such as tariff fixation, third party sales and most
important, timely payments.
The
Government has already announced a policy that 5% ethanol will be
mixed in gasoline and this percentage will be raised to 10%.
Enough capacity is available to meet this requirement. But
again we need some procedural matters to be sorted out including
taxation issues.
Both
cogeneration and ethanol doping help meet India’s energy
requirements and reduce somewhat our dependence on imported crude
oil.
Both
are also environment friendly.
Of course, they help the Sugar Industry to make adequate and
timely payment to sugar cane farmers.
We
would like the government to deregulate the Sugar Industry.
We continue to supply 10% of our production at a price much
below the cost. The
government also tells us how much sugar we can sell every month.
An expert study carried out by the globally famous KPMG has
suggested that abolition of these measures will help all stake
holders.
Getting
adequate sugar cane is a problem for a great many mills in most
years. This is because
mills have come up very close to one another. We need the government to prescribe that new mills should be
established in “virgin” sugar cane areas so that they do not
poach sugar cane from the existing mills.
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