Shares of sugar companies got a shot in the arm after agriculture minister Sharad Pawar said it’s the right time to decontrol the sugar sector. As of now, the government has banned exports and futures trading in sugar
He, however, maintained that the interest of cane growers would be duely protected as the government would have the right to fix the minimum prices for cane.
“NSCFF and ISMA have written to us saying that this is the right time to consider decontrol of the sugar sector. We are assessing the entire situation. By August, we will get an idea of total cane plantation and sugar output. We will recommend to Cabinet after the assessment,” Pawar said here.
“But, we will ensure MSP to farmers. The government will keep the right to give minimum price to farmers,” he added. The Minister had earlier this week said that the time is now “proper” for the government to give a serious thought to decontrol the sugar industry as the output of the sweetener is likely to rebound in the next crop year.
The government controls the sugar sector right from fixing the support price of cane to the quantity of the sweetener to be sold in the open market every month.
“I honestly feel that the trend which I am observing, I hope this will continue. If the trend continues, this is the proper time to create a situation where nobody should come to the Food Ministry. This is a proper time to give a serious thought to withdraw various types of controls,” Pawar had said.
The Indian Sugar Mills Association (ISMA), the apex body for private sugar mills, has been demanding the decontrol of the sector for some years now.
Till a few years ago, the cooperative sugar mills were not in favour of removing the government control. But now, the National Sugar Cooperative Factories Federation (NSCFF) has also agreed for a free market.
The country’s sugar output has improved to 18.5 million tonne in the 2009-10 crop year (October-September) from the earlier estimate of around 16 million tonnes. The sown area under sugarcane for the next crop year is also higher.
Recently, the state cane commissioners have estimated sugar production in the 2010-11 crop year to be at 23 million tonne, while the industry bodies have pegged more than this. India, the world’s second biggest producer but largest consumer of the sweetener, requires 23 million tonne of sugar to meet its annual demand.