New Delhi: Expecting a bumper 25 million tonnes of sugar production for the sugar season 2010-11, the Indian Sugar Mills Association or ISMA has asked the government to allow unrestricted export of sugar under what is termed as open general licence or OGL.
This, according to ISMA, will help sugar mills, facing losses of about Rs150 per quintal, make payments to farmers for buying cane.
“There is an opportunity of exporting 1.5 million tonnes of sugar this year as there is going to be a surplus production and sugar prices are good internationally, offering a premium of around Rs500 per quintal over the domestic price” Narendra Murkumbi, president ISMA, told media persons on Thursday.
All sugar export have to be cleared by the government. This year the government has kept in abeyance 5,00,000 tonnes of sugar exports under OGL after allowing over 1 million tonnes under the advance licence scheme, for which licences are procured by mills before hand.
Government’s expectation of sugar production for the current year is 24.5 million tonnes, 5,00,000 tonnes less than ISMA’s projections.
“We expect the supply to exceed demand by 3 million tonnes. Next year again the sugar industry is expected to have around same level of production as this is generally a two-year cycle. Higher production of sugar results in selling sugar at below cost of production, ” added Murkumbi. Exports help raising domestic prices.
Murkumbi also made a case for decontrol of sugar industry which he said “is forced to sell sell sugar at Rs1,850 per quintal through the public distribution system as against 2,800 per quintal through free sale.”
Agriculture economist YK Alagh supports the cause of sugar industry. “I am for not just exports but also imports as long as go with the market forces. Sugar is an industry waiting to be reformed as due to excessive controls a large number of co-operative mills are operating at sub-optimal levels,” said Alagh.
He also suggested creation of sugar complexes, just like they exist in other countries because sugar has other activities around it such as molasses,ethanol, liquor production etc.