Pawar’s hint at decontrol sweetens sugar stocks

NEW DELHI: Sugar stocks zoomed up to 15% on Friday after food minister Sharad Pawar said the government could consider lifting state control over sales of the commodity from the next marketing year starting October.

Marketing of sugar is controlled by the government, and rules require sugar mills to give away a portion of their produce (currently 20%) for sale at subsidised rates. Earlier attempts at decontrol did not take off because of its possible impact on prices, which is a politically-sensitive issue in India, the world’s largest sugar consumer.

The government will have a reliable estimate of sugarcane planting and sugar output for 2010-11 by the first week of September, Mr Pawar said on the sidelines of a conference in New Delhi.

“Based on that, a final decision will be taken on sectoral decontrol. But we will not rush into this,” he said.
Stocks of sugar companies such as Shree Renuka Sugars, Balrampur Chini, Bajaj Hindusthan, Oudh Sugar Mills and Simbhaoli Sugars gained between 5% and 15% on the BSE.

The minister dismissed suggestions that decontrol would also mean freeing of price paid by the industry to sugarcane farmers. “The right to fix the support price of cane for farmers will definitely be retained by the government.”