Centre to cut levy quota on sugar to 10%

The Centre would bring down the levy obligation on the sugar industry from 20 to 10%from October 1 in anticipation of a bumper output of 24 million tonnes, according to a government press release. "We will take 10% as levy sugar for 2010-11 season," food and agriculture minister Sharad Pawar said at the 51st annual meeting of the National Federation of Cooperative Sugar Factories Ltd (NFCSFL).

The government had raised the percentage of levy sugar to 20% in 2009-10 in the wake of low production. Under the current levy mechanism, sugar mills are required to sell 20% of their produce to the Union Government at Rs 1,800 a quintal, against an open market price of Rs 2,600-2,700. This sugar is distributed to the BPL families under the PDS.

The government requires 2.7 mt of sugar for distribution through ration shops to families below the poverty line. The levy percentage of 10% will be enough to meet the requirement for PDS considering the projected production for the next year.

India, the world's second largest sugar producer, is expected to produce around 24 mt of the sweetener in the next season, against 19.02 mt in 2009-10.

Regarding the issue of decontrol, as demanded by the industry, Pawar said the Centre was actively considering the proposal. A final decision, however, would be taken only after consulting the various stakeholders, including state governments. According to the minister until two years ago there was not much enthusiasm for decontrol among the cooperatives. "I am still not fully sure how cooperatives will manage once decontrol happens. There could be a tendency, for instance, among some factories to sell excess sugar to pay the growers a higher cane prices ahead of elections. You need to be fully aware of the implications," he told the gathering of cooperative millers.

NFCSFL president Jayantilal B Patel said, "this is the most opportune time for decontrol" as the country is set to produce 250 lakh tonnes of sugar in 2010-11. With 50 lakh tonnes of carry forward from the current season, the total availability of 300 lakh tonnes (30 mt) would more than meet domestic consumption requirements of 225-230 lakh tonnes.

source: fnbnews