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Govt raises levy sugar quota to 16%
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Thursday, 27 August, 2009, 08 : 00 AM [IST]
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Our Bureau, Mumbai
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The government has set the levy sugar quota for September at around 215,000 tonnes, up 16.2 % from 185,000 tonnes in August, in order to meet the festival demands. In its order dated August 21, the government said mills would have to sell levy sugar at prices provided in the Sugar Price Determination Order dated January 21.
The food ministry had been working on a proposal to revise the levy sugar price from the current average of Rs 13 a kg to around Rs 20 and also make available an additional 10% sugar under the levy quota only for the festival season. However, the government has finalized the plan to raise levy sugar quota for September at 16.2%.
At present 10% of the production at a factory is reserved for levy sugar for distribution under the PDS and the remaining is distributed through a release mechanism under which the government decides the quantum of sugar to the released every month in the open market by the factories.
The issue has been referred to an empowered group of ministers (G0M) which will decide on the levy quota as well as the price by early next month.
Any decision on increasing the levy sugar quota from 10% to 20-30% for the entire 2009-10 decontrolling the sugar sector as being demanded by the sugar industry in lieu of increasing the levy quota has been deferred for the time being. If approved, the hike in levy sugar price from the current level of Rs 13 per kg for all-India and Rs 13.45 for Maharashtra would be the first such revision in the last six years.
The industry feels the government can earmark nearly 24-30% required for public distribution system. Under this formula, states can procure it and make available for the PDS and the Centre will make up the expenses borne by the states for this purpose. For the balance, the market will determine the price and the Centre will not worry about.
The cooperative and private sugar millers desired to make available nearly 50 lakh tonnes to the government. The cooperative sugar industry suggested that of the 50 lakh tonnes, as much as 40 lakh tonnes will be supplied at Rs 22 per kg and the balance 20 laklh tonnes at an increased price of Rs 32 per kg. On the other hand, private mills submitted that they will be able to supply 30 lakh tonnes at Rs 22 a kg and another 15 lakh at the increased price of Rs 32 per kg. The price of Rs 22 per kg was considered after taking into consideration the price of sugarcane. The Indian Sugar Mills Association (ISMA) made a pitch for doing away with the release mechanism allowing mills to sell at Rs 32 per kg.
Meanwhile, the government will have a stock of 2.7 million tonnes on October 1, when the new sugar season begins. The government had estimated last month the stock would be 3.5-4 mt, down fro 10mt at the beginning of the season last year. However, there will be sufficient stocks to meet the requirements till October. The worry is that the weak monsoon has dealt a blow to the standing cane crop.
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