Sugar industry calls for export subsidies
A record production of sugar coupled with falling realisations is causing the state’s politically powerful sugar industry to run for cover.
By TNN |
PUNE: A record production of sugar coupled with falling realisations is causing the state’s politically powerful sugar industry to run for cover.
The Maharashtra Rajya Sahakari Sakhar Sangh (Sakhar Sangh), apex body of the state’s powerful co-operative sugar lobby, has asked for an export subsidy, given that mills in the state are facing another financial crisis. This subsidy, of Rs 200 per quintal, should be given by the state and central governments, keeping in mind the global outlook for the commodity over the next 18 months, a scenario of rising production and falling realisations.
“Average price realisation by sugar co-operatives in the state in 2005-06 was around Rs 1,704 per quintal (ex factory), and this has dropped to Rs 1,445 per quintal in the period between July-December 2006, Prakash Naik Navare, MD, Sakhar Sangh, said, explaining the rationale for an export subsidy.
Sugar production in the state is expected to be about 70 lakh tonnes this crushing year, while it be about 225 lakh tonnes for the entire country. The Sangh has projected production during the crushing year 2007-08 to rise to 80 lakh tonnes in Maharashtra and touch 259 lakh tonnes all India.
The Sangh attributed this sharp fall in ex-factory price realisation to the record production across the country, financial sops given by the UP and Bihar governments to the sugar units in their respective states (which they claim prices them out of the market) and the central government’s ban on sugar exports from July 2006.
ADVERTISEMENT
The newly elected body of the Sakhar Sangh has also placed other demands before the state and central governments. They have asked the Centre to create an agency like the BIFR for sick sugar co-operatives, put total de-control of the sector on hold for another year, remove sugar from the essential commodity list, create a sugar buffer stock and reduce the weightage given to sugar in the wholesale price index (WPI).The Sangh would like the state government to give them a transport subsidy for out-of-state movement, on the lines given by the UP and Bihar governments; pre-season norms to be doubled, waive off cane purchase tax for the next five years, increase the distance between two mills to 25 km and give due encouragement to co-generation and ethanol projects.
The Sakhar Sangh, led by its chairman, Balasaheb Patil, MLA, and chairman of the Sahyadri SSKL, Karad, stated that 19 states in the country grow sugarcane with an annual national consumption of 195 lakh tonnes of the commodity, growing at the rate of 3.5% annually. The Sangh, which represents the states 180 SSKs, said co-operative sugar mills accounted for 93% of Maharashtra’s sugar production.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
