Sugar decontrol: Pawar on a Brazilian study tour

Food and Agriculture Minister Sharad Pawar, who has made a proposal to Prime Minister Manmohan Singh to decontrol the sugar sector, will be in Brazil on Wednesday to study how the idea was successfully implemented in the world's top producer of the sweetener.

Pawar on a tour to the three Latin American countries, including Mexico and Argentina, will meet representatives of the sugar and the ethanol industries.

Brazil, which decontrolled its sugar sector in phases between 1991 and 1997, has achieved success in both the industries.

Sugar output in Brazil has gone up five times from seven million tonnes to 33 million tonnes since decontrol while production in India, the world's second largest producer, is expected to be 18.7 million tonnes in 2009-10.

Last week, Pawar had met the Prime Minister and made a presentation about his proposal to decontrol the industry. The proposal comes in the backdrop of expectations of bumper production of 25-26 million tonnes in the sugar year 2010-11, starting next month.

Prices of the sweetener have also declined by about 40 per cent to Rs 30 a kg from a peak of nearly Rs 50 per kg in mid-January.

However, the Brazilian sugar industry has advised India to gradually go in for decontrol to ensure that the farmers' interest was not harmed.

"We took seven years to decontrol the sector. India needs to follow a gradual process. If deregulated too quickly, there could be problem with the farmers. It has to go step by step so that agents, particularly farmers, can adjust accordingly," said Marcos Jank, CEO and President of the Brazilian sugarcane industry body UNICA here last week.

Jank, who was in India to attend an international sugar summit, had said that complete deregulation could be very complicated.

"In Brazil, we started decontrolling in 1991 and completed the process in 1997 as it takes time to establish. India has much more farmers, so it has more social responsibility than ours," he had said.

At present, the Indian sugar sector is under government control from the production to distribution. The Food Ministry fixes the monthly quota that the sugar mills can sell in the open market, as well as through ration shops.

Besides that, mills are required to sell 20 per cent of their output to the government for distribution through ration shops. Even the procurement price of the sugarcane is fixed by the Centre and state governments.

Image: Sharad Pawar