Agriculture Minister Sharad Pawar has indicated that the Centre is going to discuss relaxing the ban on trading of sugar futures early next month. The ban, which was placed in May 2009 to avoid price rigging in commodity, is valid till end of this month.
The decision on lifting over-a-year old ban will be taken after considering production level in September, the minister added. October to September is considered as sugar season in the country. Sugar prices have witnessed sharp correction since the beginning of 2010. In January 2010 the sweetener’s price was hovering around Rs 50 per kg level which has now corrected to around Rs 30 a kg. Change in the demand-supply dynamics is one of the major reasons for sharp drop in sugar prices.
India’s sugar production is likely to stand at around 25.5 million tonnes in the next season against the demand of around 23 million tonnes. For the current season ending September 30, 2010, the projections for production are at around 18.8 million tonnes.
Sugar futures trade was banned upon demand by the Left parties who contended that manipulation in the futures trade in the commodities market played a key role in increase in prices of essential commodity. In 2010-11, sugar output is expected at 25.5 million tonnes, higher than the annual demand of 23 million tonnes. The high output estimates, although questionable at this juncture, will ensure adequate domestic supply and lower consumer prices, allowing the government to free sugar trade without worrying about prices.
Pawar has also summarily rejected the Supreme Court’s recommendations of distribution of food grains to the hungry poor of the country instead of allowing it to rot in Food Corporation of India (FCI) godowns.
Sugar production in India, the world’s second largest producer and the biggest consumer, is estimated to touch 18.8 million tonnes in the ongoing 2009-10 season, nearly 3 million tonnes more than the earlier projection. The country has imported about 6 million tonnes of sugar since early last year as sugar output in 2008-09 and 2009-10 crop-year was lower than the domestic demand.
