Jaipur: For the largest producer of sugar in the world - last year its production was put at 16 million tonnes as against the world's 130 million tonnes - the emerging scenario this year is not very encouraging from the traders' standpoint. Latest reports say that this year's production will beabout 16.5 million tonnes and the crushing is on.In the world market too, sugar prices are on the downslide and dumping by some of countries such as Brazil, Thailand, etc, with surplus output has been underway.In Brazil, sugarcane is even used as `alcohol.' Nearly 40 per cent of sugarcane production in Brazil is used by motor vehicles. This year, the market is expecting a glut situation due to increased production - of around 16.5 million tonnes. Last year, the production was 15.5 million tonnes.In the 1990s, when sugar production was low at around 9.6-9.8 million tonnes, the government imported about two million tonnes at a mind-boggling price of $380 per tonne.
The cost of imports was so high that it was no wonder that former food minister late Kalapnath Rai was implicated in the sugar scam.International sugar prices are currently hovering in the range of $130 per tonne to $140 a tonne. Even Australia has been selling sugar to outside countries.India's sugar imports are marginal and the imported varieties are only used in special categories.
This is despite the fact that sugar has been put under the open general licence (OGL). On imports, however, the Government has imposed some duty. Prior to April 1998, there was no duty on imports.Getting a license to put up a new sugar plant is quite easy now compared to the position that prevailed in January 1997 when the Government, headed by then Prime Minister HD Deve Gowda, had given no less than 30 new licenses. Of these licenses 15 had gone in favour Karnataka.
Today's crash in the global market was not foreseen even by experts, but it has largely been contributed by events in Indonesia and South Korea. Sugar consumption in these countries has fallen to a large extent.In India, sugar is still a controlled commodity with 30 per cent of the production by mills allotted as levy sugar. The remaining 70 per cent is allowed to be sold in the open market. The sugar lobby is pressing the Government to lift the levy condition, but the likelihood of this happening in the near future is bleak.Out of the 400-odd sugar mills in the country, about 60 are closed.
In Maharashtra and Uttar Pradesh, the number of sugar mills is around 240. In Rajasthan there are only three mills. The Mahajan Committee report on levy sugar is yet to be implemented by the Government. The committee had recommedned a gradual lifting of all the curbs on the sale of sugar. It is only due to the `release mechanism' followed by the food ministry that sugar prices have remained under control, sources inform.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.