INDIA: Government may back down from sugar price rule
Published: 11/20/2009, 9:03:30 AM
The Indian government, faced with fierce protests from farmers, may back down on an ordinance on the price of sugarcane, The Economic Times reported Friday, adding that Prime Minister Manmohan Singh has indicated that the proposed legislation may be changed, according to Dow Jones.
The ordinance seeks to raise the state-set price of cane to INR130 (US$2.8)/100 kilograms from about INR108/100 kg--but farmers say the increase doesn't reflect the soaring prices of refined sugar, and want the rate to be higher.
In India, the federal government sets the price of sugarcane, but provincial governments issue what is called a state-advised price, which is usually higher than the federal rate.
The new ordinance--which is set to be considered by lawmakers--will make individual states pay the difference between the state-advised price and the federal price.
Earlier, mill owners had to pay the difference.
The row is likely to further delay cane crushing by India's mills, which will in turn lower the country's sugar output to below the government's estimate of 16 million metric tonnes for the marketing year that started Oct. 1.
India's lower house of Parliament adjourned till noon Friday, the second consecutive day of the winter session, as opposition parties halted proceedings to demand higher sugar cane prices for farmers.
Farmers in the second largest sugar-producing state, Uttar Pradesh, are demanding higher sugar cane prices in line with a jump in the local rates of refined sugar.
India's sugar production in the last marketing year is estimated at 14.7 million tonmes, down 44% from 26.3 million tonnes in 2007/08, Junior Agriculture Minister K.V. Thomas said Friday in response to a question in Parliament.
The previous estimate for the year ended Sept. 30 was around 15 million tonnes.