Sugar: Bitter for producers, sweeter for consumers

New Delhi, May 27 (UNI) It may seem strange but sugar may soon have a dual taste -- bitter for the producers and sweeter for the consumers--following domestic prices languishing below production cost and forecasts of a bumper crop for the second consecutive year.

Sugar output in the year starting October is expected to exceed 28 million tonnes, one million tonne more than the projected record production this year.

The industry's problem began when the new sugar season in October began, with a carry over stock of 4 million tonnes. The producers now fear that stocks at the end of the season would touch about 10 million tonnes, further compounding the problem.

''We have urged the Government to raise the buffer stocks limit to at least five million tonnes to ease the burden of the mills,'' said Mr Vinay Kumar, Managing Director, National Federation of Cooperative Sugar Factories Ltd. (NFCSF).

The industry is also demanding for an increase in use of ethanol to 10 per cent for blending the petrol and that too throughout the country to bail out the industry from the present crisis and problem of plenty, he added.

Mr Vinay further said that prices of sugar presently in the domestic market were higher than those prevailing in the global markets -- 270 dollars to 285 dollars a tonne.

Many sugar mills had reported huge losses because of prices prevailing below production cost in the domestic market.

The hardening of rupee close to a 9-year high during the month has also discouraged exports as margins fell by 10-20 per cent.

The Government should do something urgently as the next year will be even worse, he said.

The Government announced last month that sugar mills in coastal areas would get a subsidy of Rs 1,350 a tonne, while those in the northern part of the country would receive Rs 1,450 per tonne to help prop up exports, but this incentive was only for white sugar exports.

UNI