The sugar industry is waiting for the Government’s decision on decontrol – freeing sugar and sugarcane from the stringent regulations, according to M. Manickam, President, South Indian Sugar Mills Association, Tamil Nadu.
He hoped that the Rangarajan Committee report on freeing the sugar industry from artificial regulations would be implemented soon.
Doing away with levy sugar supply, a requirement that involves sugar industry supplying about 10 per cent of its annual production, at nearly half the market price, to meet the needs of the Public Distribution System, is a crucial expectation, he said.
The committee has come out with wide ranging recommendations relating to various aspects of regulations governing the industry.
N. Ramanathan, immediate past president, SISMA-TN, said doing away with levy commitment and artificial control on market through sugar releases, will be of significant benefit to the industry and the market.
Ramanathan pointed out that sugar mills supply 24-25 lakh tonnes, about 10 per cent of the total sugar production, to meet the levy commitment. The mills are paid about Rs 18,000 a tonne against the market price of about Rs 32,000 a tonne. That will be a nearly Rs 3,000 crore relief to the industry.
A Vellayan, Executive Chairman, Murugappa Group, said the industry’s growth “has been stifled by the constant tinkering, both by the States and the Centre” on a range of issues including cane price, levy obligation, sugar release, imports and export policy and intervention in marketing of by products including molasses, alcohol, cogeneration power tariff and sugarcane command area fixation.
The industry hopes the Government announces a policy to do away with levy sugar obligation, sugar release mechanisms, opens up sugar exports with suitable incentive subject to a safeguard stock-to-use ratio of four months, imposes flexible import duty of 25-60 per cent on sugar and increases ethanol blending to 10 per cent nationally on a compulsory basis from the current five per cent.
Palani G. Periasamy, Chairman, Dharani Sugars, said freedom from levy commitment is a long-awaited decision.
While the industry has been hoping for decontrol, the various aspects of decontrol need to be clearly understood. Artificial controls on the market need to be done away but regulations relating to command area concept – linking sugar mills to specific sugar growing areas has to be retained.
Sugarcane pricing too, should be based on economic consideration rather than populist demands.
Manickam said it is unfortunate that the policy makers are not addressing the issue of viable sugarcane pricing. The pricing of the raw material has to be linked to sugar prices for the mutual benefit of sugar mills, farmers and consumers.
Command area concept
Also, the concept of command area has to be retained as sugar mills nurture the sugarcane growing areas to increase production and productivity. This is a long-term relationship between industry and farmers, he said.
Periasamy said mills do sustained extension work in the command area. In the absence of a command area and commitment to specific sugarcane growing areas, the system would collapse.
Sugarcane pricing has to be based on specific identified parameters and linked to sugar prices, he felt. Ethanol-blended fuel policies also need to be implemented in a sustained way.
Ramanathan hoped that the `first move towards decontrol’ and the long-awaited reforms in the sugar industry are taken in the coming budget. While several committees have been constituted to look into sugar industry reforms, it was the Rangarajan Committee that was for the first time instituted by the Prime Minister. The industry is optimistic that the process will be initiated soon.