Rajshree Pathy, President of the Indian Sugar Mills Association, writes:

This refers to your report “Sugar turns bitter on eve of elections” (The Hindu, March 5).

The report carries certain incorrect statements. Sugarcane output is quoted to decline to 170 lakh tonnes this year against 263 lakh tonnes last year.

This figure pertains to sugar output and not sugarcane output. Further, the government has imposed no ban on sugar exports since last September. It has only discontinued the subsidy for exports and reintroduced release order similar to sale of sugar in domestic market.

Much of the criticism over steep increase in sugar prices compared to last year would appear manifestly misplaced. Pressured under extreme glut, sugar realisation then was far below the cost of production.

In fact, the government had to find innovative ways to fund the industry through a combination of loan and subsidies so that farmer realised his cane dues. Hence sugar prices during 2007-08 do not and cannot constitute a normative base. Viewed over a medium term, current realisation would only mark 6-8% annualised increase over 2005-06 in tune with inflation.

The report clearly asserts the high retail prices for other agro products. At a time the farmer is lured by lucrative prices of competing crops, including hefty hike in minimum support prices announced by the Central and State governments, it is imperative for sugar mills to offer comparable higher price for sugarcane. This doubtless warrants corresponding level of sugar prices.

Further, a large chunk (67%) of sugar produced in the country is consumed by FMCG [Fast Moving Consumer Goods] segment. The industry is forced to subsidise consumption of the poor through the PDS by offering 10% of its production as levy sugar at prices far below its cost of production.

Hence there is little justification to complain or crib over market-driven prices when the poor and needy are fully taken care of through PDS.

India being the largest sugar consuming nation can ill-afford to continually look for imports to bridge its deficit. Dependence on large scale imports would trigger global sugar prices to dizzy heights and bring greater prejudice to domestic consumer.

The need of the hour hence is to reckon with realistic sugar prices so that sugar industry is empowered to offer remunerative cane prices and in turn quickly scale up domestic production to regain demand-supply equilibrium.

This alone can be the sure-shot and least-cost remedy in the long run.