Kolkata, Dec 15 (IANS): The Indian sugar industry is reeling under estimated losses of Rs.700 per quintal of the produce resulting from imbalance between input costs and the output, an industry veteran said here Monday.
"The cane prices are regulated by the government while the sugar prices are governed by the market," said chairman and managing director of Riga Sugar Company Om Prakash Dhanuka.
A former president of Indian Sugar Mills Association, Dhanuka said sugar trade involves over five crore families nationally and prices are the lowest in India globally.
The cost of sugar production on the basis of State Advice Price is Rs.3,500 per quintal, while the wholesale price is Rs.2,800 per quintal implying a loss of Rs.700 every quintal.
"We have approached the government time to time explaining our situation. However, only two recommendations of the Rangarajan Committee have been implemented," Dhanuka said.
The Rangarajan Committee on deregularisation of the sugar sector in India submitted its report in late 2012. The committee consulted the industry stakeholders, the chief ministers of the important sugar producing states and related government bodies.
"The main recommendation (of the Rangarajan Committee) for linkage of sugarcane price with sugar and its by-product realisation has not been yet implemented which is the crux of the problem of the sugar industry," Dhanuka added.
He said the industry is unsure about repaying the estimated Rs.1,300 crore dues to farmers as cost of production is much higher than the wholesale price. Further, the cost of production has gone up by at least 20 percent over the past two years.
To a query over retail prices and the market forces, Dhanuka said: "It is the retail segment which is making the profit as it involves middlemen. While we ship the produce at Rs. 27 every kg, the retail price is anywhere between Rs.34 to Rs.41 due to the levels of middlemen the product is routed through."
Advocating total deregulation of the sugar industry, he called for creation of buffer stocks outside India to help the industry tide over tough times.