Centre mulls distribution of sugar to APL families

With low rains in main sugarcane growing areas of western Uttar Pradesh, sapping any chance of significant increase in sugar production in 2009-10, putting added pressure on already high prices, the central government in its ongoing meeting with sector representatives has proposed to extend sugar supply under the public distribution scheme to above poverty line (APL) ration card holders in addition to the BPL consumers.

At present, the government stipulates that every mill in the country has to allocate around 10% of its produce at a pre-determined price of around Rs 13 per kilogram for PDS. Agriculture minister Sharad Pawar held a two-day long discussion with representatives of the sugar industry to evolve a consensus on raising the levy quota and also to work out means to increase supplies and control prices during the festival season.

The meeting remained inconclusive and the government and the industry would once again sit on August 20 to arrive at an acceptable formula which will be later taken up by the food and agriculture ministry for cabinet's approval.

Sources said the government had pegged its sugar requirement under levy at around 60 lakh tonnes for the 2009-10 marketing season that stars in October after taking into account additional requirement for meeting for APL families.

The cooperative and private sugar millers expressed their intention to make available nearly 50 lakh tonne of sugar to the government under the levy quota. Sources said cooperative sugar, units represented by the National Federation and the Federation of Cooperative Sugar Factories in Maharashtra, proposed out of the 50 lakh tonne around 40 lakh tonne will be supplied at a price of Rs 22 per kg and the balance 10 lakh tonnes at an increased price of Rs 32 per kg.

However, representatives of private sugar mills, under the aegis of Indian Sugar Mills Association (ISMA), proposed to supply 30 lakh tonne at Rs 22 per kg and another 15 lakh tonne at the increased price of Rs 32 per kg. "The price of Rs 22 per kg was considered after taking into account price of sugarcane," an ISMA official who participated in the meeting said.

ISMA also pitched for doing away with the release order mechanism allowing mills to sell sugar at Rs 32 per kg and also called for imposition of a cess of Re 1 on sugar. India's sugar production is projected to drop below demand for the second consecutive year in 2009-10. because of low cane planting.

As per latest government estimates sugarcane has been planted in around 100,000 hectares less as compared to last year, putting an added pressure on retail prices, which have already climbed by more than Rs 10 per kilogram in the last year because of low output.