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  Maharashtra co-op mills expect financial freedom
http://www.business-standard.com 07132010

Say it would benefit both mills and sugarcane growers.

Cooperative sugar mills in Maharashtra, which contribute nearly a third of the country’s output, have welcomed the reported move of the Union government to remove the many controls on the sector.

It would mean professional functioning and not having to keep approaching the government for loan guarantees, sources said.

The Federation of Cooperative Sugar Mills in Maharashtra, representing 170-odd units, has been pushing for decontrol for quite a while. Federation sources told Business Standard, “The time to decontrol is right, with the country expected to have a bumper sugar crop for the next three years. In Maharashtra, which is expected to have sugar production of eight million tonnes next year, mills are selling the 20 per cent levy sugar(the government-imposed quota for its ration shops) at Rs 1,700 a quintal against the market price of Rs 2,500 a quintal. The government should implement decontrol after taking the industry into confidence.”

The decontrol regime would stabilise after one crushing season, the sources said.

Having the market determine the price would benefit both mills and sugarcane growers, they added.

As reported earlier, there are indications that the central government may remove the levy obligation and withdraw the release mechanism (specifying when mills may sell the non-levy sugar).

However, while decontrolling, the Centre is also keen to keep powers to decide the price to be paid by the mills to farmers. The reported plan is also supposed to do away with decisions on export and import and specifying the distance between two mills.

Shankarrao Kolhe, former cooperation minister of Maharashtra, said: “Sugar decontrol is a must for the survival of the cooperative sugar industry. After decontrol, mills would not need government guarantees or various packages.”

Madhukar Pichad, founder of the Agasthi cooperative mill and state president of the Nationalist Congress Party (Union food minister Sharad Pawar is its head) also welcomed the Centre’s reported move.

“Currently, cooperative mills function under several government restrictions. Why should these only apply to the sugar industry?,” he asked. A market-determined price, he said, would benefit mills and also enable cane growers to plan better.


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