Sharad Pawar to meet sugar industry over reform

Farm Minister Sharad Pawar has called a meeting with top sugar industry officials on Thursday to discuss lifting restrictions on the heavily regulated sector, industry and government sources said.

India, the world's top sugar consumer, decides the quantity mills can sell, buys 10-20% of mills' output at lower rates for subsidised sale to the poor and sets the price mills must pay for cane to farmers besides enforcing other regulations.

Industry officials say tight controls over sugar distort the market and accentuate output swings in the country, which was a large importer of sugar last year, helping drive New York-traded raw sugar to its highest price in 29 years early this year.

"The minister has sought a meeting with some leading sugar industry officials and mill owners to get down to brass tacks," a senior industry official, who asked not to be identified since the information is not yet public, told Reuters.

India's sugar output is expected to jump to about 25 million tonnes in the new season that begins on October 1, from 18.8 million tonnes in 2009/10.

Expectations of higher output have helped drive down domestic prices by more than a third from a record Rs 3,972 (USD 85.05) on January 7.

Buoyed by the expected good output in the new season from October, Pawar said on July 13 that his government would prepare within ten days a blueprint for reforms in the sector, a politically sensitive issue.

The government believes opposition protests against reforms will be muted by lower domestic prices of sugar.

The Indian Sugar Mills Association (ISMA), a body of top private millers, said last week 2009/10 output was expected at 18.8 million tonnes, up from 14.7 million a year ago.

The country's sugar stocks at the start of the new season in October would rise to 5.9 million tonnes from 3.2 million tonnes a year ago, the ISMA said.

Analysts say normal monsoon rains will also encourage the government to usher in reforms in the sector after it recently freed up fuel and fertiliser prices despite strong political protests from the opposition and some allies of the Congress-led coalitiongovernment.

source: moneycontrol