The Government may remove stockholding limits for sugar traders after November following expectations of higher output in the next season starting October.

“The stockholding limits have recently been reviewed by the Empowered Group of Ministers and it has been decided to extend it up to November 2011 in view of the ensuing festival and marriage season when demand for sugar will peak,” said the Food Minister, Professor K.V. Thomas.

“I hope the sugar prices will remain at reasonable level during these months and there may not be any need to extend the limits beyond November,” Mr Thomas told the 52nd annual general meeting of the National Federation of Cooperative Sugar Factories Ltd on Tuesday.

The stockholding and turnover limits were imposed to check hoarding by unscrupulous traders who increase prices by creating artificial scarcity in the market.

Stating that the Government was not averse to decontrol of sugar, Mr Thomas called upon the industry to suggest an alternate mechanism to ensure availability of sugar throughout the year at reasonable prices.

“I have requested the Prime Minister to request Dr C. Rangarajan to look at the issues relating to de-regulation of the sugar sector so that the long-standing demand of the industry is examined in a non-partisan manner,” Mr Thomas said.

The Minister also hinted at review of the initial output estimates for new sugar-year 2011-12. “Coming to ensuing 2011-12 sugar season, I am aware that there is some difference on preliminary estimates of sugar production and efforts are on to reconcile the figures,” Mr Thomas said.

The Food Ministry had recently estimated 2011-12 output at 24.6 million tonnes, up from current year's 24.3 million tonnes. The Food Ministry's estimates were lower than the industry projections of 26 million tonnes and the Agriculture Ministry's forecast of 25.5 million tonnes to 26 million tonnes.

“The excess production can depress prices…. Keeping in view the estimated opening sugar stocks and the estimated domestic production and consumption in 2011-12 season, the Government will take appropriate steps to maintain price stability so as to ensure that sugar factories make fair realisation and pay remunerative cane price to sugarcane farmers and sugar prices remain at reasonable levels,” Mr Thomas said.

source: thehindubusinessline

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