Panel advocates smooth import of sugar stocks

NEW DELHI: A high-level committee that met on Wednesday has directed the food ministry to remove all hurdles to import of sugar into the country on priority in the wake of wholesale sugar prices shooting past the psychological Rs 30/kg level last week on the back of domestic supply shortage.

However, sugar prices are unlikely to drop in the near future. The Rs 30/Kg wholesale price translates to retail prices of Rs 33-36/kg and, according to a sector monitor. If rains are inadequate in the rest of August and September, the remaining monsoon months, there is every possibility of sugar wholesale prices shooting up to Rs 50-55/kg. Acreage under sugar is markedly low, and is likely to yield a less than 15 million tonne output for the 2009-10 sugar season.

The Committee of Secretaries headed by Cabinet Secretary K M Chandrasekhar discussed at length the various measures, including administrative and fiscal ones, that have been taken by the government thus far to keep sugar prices under check and those that need to be taken further.

Food minister Sharad Pawar admitted this week that the government was acutely worried about domestic short supply of both sugar and pulses on the back of poor monsoons.

Ironically, despite zero duty, the industry is finding it extremely unviable to import raw sugar at its current high global prices and process it, making fresh import contracts slow although the government has extended the period for zero duty imports.