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Indian Sugar Industry Meeting with Food Secretary, 6 th August, 2012

Indian Sugar Industry Meeting with Food Secretary, 6 th August, 2012. Balance Sheet 2011-12. Sugar Production Projections for 2012-13. *. 1. Levy Sugar Liabilities on Sugar Industry. 10% of production as levy since 2001-02

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Indian Sugar Industry Meeting with Food Secretary, 6 th August, 2012

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  1. Indian Sugar IndustryMeeting with Food Secretary,6th August, 2012

  2. Balance Sheet 2011-12

  3. Sugar Production Projections for 2012-13 *

  4. 1. Levy Sugar Liabilities on Sugar Industry • 10% of production as levy since 2001-02 • In 2009-10, increased to 20%, because of low estimated production of 145 lakh tons, which actually turned out to 189 lakh • 21 lakh tons of levy carried forward as on 1st Oct, 2011 • Worth Rs.6000 crore • Adding 11-12 obligations, total levy available was 47 lakh • Usual average lifting of 16-17 lakh, would leave carry forward of 30 lakh for next year

  5. Actual Lifting of sugar Annual levy requirement on paper -27 lakh tonnes * Data not available beyond April 2009

  6. Problems of Carry Forward of past liabilities • Levy obligations of mills can be carried forward by 2 years • Higher inventory burden/ blocked storage space • Blocked cash flows: cane price arrears • Higher interest burden, borrowed at 14-16% • Quality deterioration in terms of colour, lumps and sucrose • Payment by Govt. at previous year’s rate • If supplied from new season’s production, costs are higher, but rates are still of previous season

  7. Status of Levy Sugar on 30 Sept 2012 • Unreleased quantities: • Plus, there would be some unlifted quantities also

  8. Our Requests for levy sugar…. • Conversion of past liabilities • 2010-11 conversion to be done immediately • Reasonable Carry Forward of past liabilities • Till new production is available for levy • Conversion of past liabilities automatically • Announcement of new season’s price before 30th Sept 2012

  9. 2. Compulsory jute packaging order • JPMA, 1987 covered food-grains, cement, fertiliser and sugar. • Cement and fertilizers excluded in1998 and in 2001 respectively. • Ministry of Textiles administers JPMA, jute being their subject. • Sugar Directorate administers Sugar Packing & Marking Order • It permanently requires compulsory packing in 50 kg jute bags only. • There is an Act viz. JPMA, this Order should be repealed • SAC has to annually recommend for packing in jute bags • Imported jute or the bags can’t be used for foodgrains & sugar

  10. Problems being faced by Sugar Industry • Inadequate jute/jute bags in India (accepted in Parliament too) • 10% of requirement is always imported from Bangladesh • Poor quality of jute bags • Big gaps lead to leakage and moisture regain • Below standard bags, weight and dimension problems, causing mills to fill extra sugar to match gross weight and problems in stacking • Jute bags cost more than double that of PP/HDPE bags • Translates into additional cost of 40 paise per kilo of sugar • Rs.1000 crore annual loss to mills, reduces payment to farmers • Govt. agencies protected by administered price

  11. Sugar should be removed from JPMA • Imports and compulsory packing cannot go together • SAC recommended for 20% compulsory packing of sugar in jute bags for 2012-13 jute year (July-June) • CCEA note for same expected soon • Food Ministry should recommend for complete removal of sugar • Gaps in jute bags allow air, good for foodgrains, bad for sugar • When shortage, sugar should be first completely taken out from JPMA • Treat sugar industry at par with other private industries like cement and fertilisers

  12. 3. High cost of production: Low ex-mill price: Two largest cane producing states (Rs/ qtl)

  13. Thank You

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