Sugar industry may increase supply after talks with govt

The government and the sugar industry may reach an agreement to augment supply of the sweetener both in the open market and under the PDS to curb the rise in price that has crossed Rs 30 a kg in the retail market.

Food and Agriculture Minister Sharad Pawar disclosed this today after a meeting with sugar industry officials to tackle supply constraints and curb shooting prices.

The agreement is expected to pave the way for more supply of levy sugar (used for public distribution purpose) by the industry.

At present, sugar millers are mandated to provide 10 per cent of their production to the government, which supplies the sweetener through ration shops at cheaper rates.

"I can tell you that the industry's attitude was quite constructive. They would like to co-operate with the government and are ready to find some solution where we will be able to improve availability in the open market and in the public distribution system," Pawar said.

Pawar would carry forward the talks with the industry in the next two days. "We have decided to meet again. Then probably we will be able to reach some understanding," he said.

The meeting with the industry came amid apprehensions that sugar prices, already up by over 70 per cent in a year, may spike further during the coming festival season.

Prices of sugar have surged due to a decline in the output of the sweetener to 14.8 million tonnes in the 2008-09 season from 26.4 million tonnes a year before.

The government has released 16.50 lakh tonnes of sugar for sale in the open market during August to meet domestic consumption.

Moreover, 1.85 lakh tonnes of levy sugar has been released for supply under the public distribution system.

These apart, the government expects at least 20,000 tonnes of sugar to be offloaded in the domestic market in August from the import of 61,371 tonnes by state-owned trading agencies, taking the total supply of the sweetener to 18.55 lakh tonnes.

The government has taken measures to curb price rise and improve the supply situation over the past four months, including stock limits on sugar and imports of raw sugar.

It has also suspended futures trading in sugar till December-end to check rising prices in the spot market.