SUGAR WOES

Recent announcement of Union Agriculture Minister to free sugar industry from controls have been welcomed by the Industry at large But given the complexities of Sugar dynamics that prevail in India it require more than political will to set this industry right In order to understand the real problems ,one need to first analyse various issues with this regard In India Sugar is under the perview of essential commodities act of 1955 which means that Government control sugar capacity additions through industrial licensing and determines the price of sugarcane and the quantity that can be sold in the open market As a result of which the sugar mills are expected to surrender 20% (currently) of their production to the Government at prices below the market level prices This sugar is known as Levy sugar to be used by the public distribution system In addition to this there is a second restriction on the mills in the form of Free sale quota After surrendering 20% the remaining 80% are to be sold by mills in a restricted marketing environment The Government releases what is called monthly free sale quota to mills to be sold within the stipulated time frame In addition to this there is a differential pricing systems by the centre and the State governments The centre announces MSP and the states have their own SAP (state adminstrative price) In the latter case most of the times the prices are determined by political expediency to humor the farmers without a clear analysis of the production lecel,international prices etc as a result of which the cane grower farmers are made to wait for months to get their payments Then there is this curious principle of growers have to sell to the miller within a 15km radius Apart from these policy problems the major problem of sugar industry all over the world is its cyclical nature Other countries have offseted this problem by diversifying into ethanol and power generation from Bagasse But in India we dont have any clear policy with this regard Some share of profits can be envisioned for the farmers by actively pushing for additional byproducts Similarlyin india the sugar yeild is one of the lowest in the world A perfect oppertunityis knocking our doors with European union opening up its sugar industry India exports primarily to Asian countries like indonesia,bangladesh,& Pakistan Though we have limited capacity of production of refined sugar which is the requirement of EU,but still our production process can be adjusted accordingly With every chances of having a bumper production( estimated to rise to 25million tonnes from existing 18 million tonnes) these plethora of issues assume added significance What we need today is the fine balance of protection of consumer interest and commercial viabilities of the millers The Government has much work to do with this regard

SUGAR WOES

Recent announcement of Union Agriculture Minister to free sugar industry from controls have bee

ARTIFICIAL BARRIERS- serious threat to International Agri trade

The major problems that have been encountered by the Indian Exporters is the arbitrary quality and technical restrictions setting by the western markets This is despite clear cut requirement of WTO standards regarding food security and technical barriers to trade The major problem with this regard is continuous shifting of quality standards and specifications to the ignorance of the exporters of the third world countries A lot of times Indian Exporters send consignements to countries only to discover that they have failed some specific quality or technical norm and consignements have to be returned The number of these TBT (technical barriers to trade) have increased sharply from just 365 in 1995 to 1030 in 2007 China alone has 560 TBT measures followed by USA and european union India has already asked the WTO to examine these multiplicity of international standards These non tariff measures (NTM) the efforts should be made by the member countries to list these NTMs Once WTO makes it mandatory to post all NTM data there would be some sense of uniformity which would obligate the countries not to change the standards frequently Moreever exporters would know the existing standards in the destination countries Sometimes WTO prescribed international certification is not considered by various groups The requirement of Aflatoxin in Groundnut is prescribed at 15 parts per billion by CODEX whereas EU has a standard of 4 PPB These multiplicity standards creates hurdle in the smooth flow of international agri business