Sugar Technologists’ Technical Committee Seeks Dual Pricing System for Sugar Industry

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Sugar prices have always remained a talking point in the sugar industry, and as it is a volatile industry where stakeholders have always been in a dilemma on how to deal with surplus sugar stocks. With time to time, in spite of various remedies, like a hike in minimum selling price, soft loans provided by the government for a sector, it only helped to give them respite up to some extent.

The technical committee of The Sugar Technologists’ Association of India, believes there is a need of dual pricing system for the sugar industry in order to come out of the crisis and to channelize excessive sugar stocks.

Speaking with ChiniMandi.com,Mr.Sanjay Awasthi, President of the Association said, “Individual consumers consume sugar only to the tune 30-35 percent, and the remaining 65-70 percent is utilized by bulk consumers like bakers, beverages, sweet makers, confectionery, etc. As per STAI technical committee views, the price of sugar for individual consumers should be hiked to Rs.36/kg and Rs.50/kg for the bulk consumers. The bulk consumers make hefty profits from the sugar which is their main ingredient. They should not be subsidized at the cost of the farmers and sugar mills.”

Citing an example of a gas cylinder, Mr. Awasthi said, “In the case of gas cylinders, the Central Government is following dual pricing policy. The domestic consumers get a cylinder of 14.2 kg at Rs.706.80 (Rs.49.72 per kg.), whereas the commercial consumer pays Rs.1305.67 (Rs. 68.72 per kg) for a 19 kg cylinder. Industrial gas is 38 percent costlier than kitchen gas.”

This year too, India would close the sugar season 2018-19 with a record sugar production of 32.5 MT same as last years. With an inventory of 10.5 MT from last year’s production, the industry will have a huge surplus to deal with.

Mr. Awasthi advises the following measures apart from dual pricing:

Strict exports: The Central Government strictly gets at least 5 MT of sugar exported from India.

Increment in buffer stock: Increase buffer stock to 5 MT. Stocks to remain with factories on behalf of the Government. However, factories are paid for the sugar stocks @ Rs.3600/quintal in order to increase their liquidity.

Manufacture of Ethanol: Diversion of sugarcane juice to manufacture of ethanol by factories having ethanol facility for at least 100 days. This can be done with minimum investment by the factories with distilleries by installing small Clarification and Raw Syrup equipments. The government should extend assistance in this endeavor to factories from SDF.

The industry should divert sugarcane juice to ethanol until we come close to the level of our domestic consumption plus buffer stock of 5 Million MT.

Looking at aspects of the weather, its impact on the calculation of the sugar sector, Mr.Awasthi said, “Speaking on strengthening El Nino and monsoon on sugar cane crop there have been different views on the forthcoming monsoon season. The India Meteorological Department forecasts Jun-Sep rainfall at 96 percent of long-period average whereas some private forecaster expects rains at 93 percent of average. Some international weather agencies are forecasting of drier-than-normal monsoon in India.”

“Sowing takes place between April–June in major parts of the country. We should get a clear picture in the next two months. Parts of Maharashtra and other southern states did not get adequate rainfall in the past 2-3 years so a lot will depend on the monsoon this year. Frankly speaking any forecast at this stage is premature but gut feeling says that production will remain plus or minus 2 million tons with all climate conditions predicted this year.” He further added.

2 COMMENTS

  1. Dual pricing of sugar with strict control of monthly releases will certainly revive the health of sugar industry. Dual pricing has stood the test of time. Controlled releases were keeping the factories in liquidity crisis. Hence the factories were asking for total decontrol. With the buffer stock crreatec in the fasctory godowns with 100 % drawing power will certainly see the mills with some cash on hand to pay the cane growers. The Govt must fix the requisitioned portion of the sugar (levy it is called) price at very reasonable level. As the STA has indicated why the mills subsidise the bulk consumers like soft drinks. My considered opinion is a very strict and reasonable dual pricing will certainly revive the health of this industry, the world’s largest.I retired from the industry after serving foepr 39 years and hence my findings and opinions.

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