The government will soon give greater freedom to the sugar industry in offloading the unsold quantity of subsidised sugar it?s mandated to supply for state-run welfare programmes, food minister KV Thomas said on Wednesday.
The food ministry would soon allow mills and co-operatives to offload the unsold quantity of the subsidised sugar quota?known as levy quota?in the open market if it?s not lifted by state-run agencies within six months.
Currently, mills and co-operatives are required to keep the unsold levy stocks for two years before they are allowed to offload these in the open market.
The food ministry will also soon notify the revised price of the subsidised sugar, known as the levy quota, for the marketing year that started October 1, the minister said.
Currently, mills are required to sell 10% of their output to the government at slightly more than R19 a kg. The industry says the levy sugar price accounts for just around 70% of its cost of production, and dents the balance sheets of mills. As the Centre has raised the benchmark price of cane by 17% to R170 per quintal for 2012-13, at least 21-22% hike in the levy sugar rate is expected, said a senior industry executive.
?I have noted your concern regarding the delay in the notification of levy sugar prices for the year 2012-13. I have directed the Department of Food and Public Distribution to expedite the notification and ensure that the mills don?t suffer on this account. Notification regarding the decision of carry forward of levy sugar will also be issued soon,? Thomas said, addressing the annual general meeting of the National Federation of Co-operative Sugar Factories.
?This would further improve liquidity in the cash-strapped sector,? said National Federation of Co-operative Sugar Factories mangaing director Vinay Kumar.
Thomas also said the government will implement most of the recommendations of the Rangarajan panel for shedding state control over the sugar sector.
The panel, set up by Prime Minister Manmohan Singh in January, suggested in October freedom to mills from the levy obligation and also pitched for the scrapping of the release order mechanism through which the government controls sugar sales in the open market.
