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NEW DELHI, July 30

THE Government on Tuesday approved the Statutory Minimum Price (SMP) of sugarcane for the coming 2002-03 crushing season (October-September) at Rs 64.50 per quintal, linked to a basic recovery of 8.5 per cent and a premium of Rs 0.76 per quintal payable on every 0.1 percentage point increase over this level.

This is as against the base SMP of Rs 62.05 per quintal and incremental premium of Rs 0.73 per quintal declared for the 2001-02 season. The decision to hike the basic SMP by Rs 2.45 per quintal, taken at the meeting of the Cabinet Committee on Economic Affairs here, is in line with the recommendation of the Commission for Agricultural Costs and Prices (CACP) 9.75 lt of free sale sugar released for August and September.

Meanwhile, the Government has also released 9.75 lakh tonnes (lt) each of sugar as the quota for `free sale' by mills in the open market for the months of August and September 2002. With the levy sugar quota (for the public distribution system) for these months being fixed at 2.16 lt, the total availability of sugar for internal consumption for August and September 2002 comes to 11.91 lt each.

For July, the Government had announced the industry's free sale and levy quotas at 9.5 lt and 2.16 lt, respectively. Taking into account the releases made for the coming two months, the total sugar available for internal consumption for July-September 2002 works out to 35.48 lt (29 lt of free sale and 6.48 lt of levy quota), which is, in fact, not only below the 35.79 lt (29 lt of free sale and 6.79 lt of levy) quota for July-September 2001, but even lower than the aggregate releases of 38.69 lt and 35.90 lt made during the same quarter of 2000 and 1999, respectively.

The official monthly release mechanism used to regulate supply of sugar in the market is not only back, but very much alive and kicking contrary to the Government's stated policy to totally decontrol the industry.

The move to rein in overall indigenous sugar availability below even the previous year's levels seems to be a conscious attempt to prop up sentiments in the commodity, which has, of late, been subjected to unprecedented bearishness. Sugar prices have been ruling at six-year-lows, a development attributed to the earlier decision to release free sale quotas of mills on a quarterly, as against monthly, basis with effect from January 2002.

But from July onwards, the Government, under pressure from the industry, reverted to the system of announcing free sale releases of individual mills on a monthly basis, which is aimed at reducing the uncertainty caused by the more open-ended quarterly release system.

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