Sugar industry, Govt meeting today cane price for 2008-09 crop yr, also to seek 10% mandatory blending of ethanol with petrol from Nov

Sugar industry representatives are today meeting top government officials to discuss a host of issues, including the statutory minimum price for cane for 2008-09 crop year. The first meeting is being held with Commission for Agriculture Costs and Prices members to fix the statutory minimum price for sugar cane for season beginning October 2008, said Maharashtra State Co-operative Sugar Factories Federation Managing Director Prakash Naiknavare.

For the season starting October this year, the Cabinet Committee on Economic Affairs had fixed the statutory minimum price of sugarcane at Rs 81.18 per 100 kg subject to a basic recovery rate of 9%. For the current season, the cane price was fixed at Rs 80.25.

Traditionally, the state governments recommend a higher cane price based on a higher recovery rate of 10-12% to ensure better returns to farmers. This year the situation is likely to be different as realisations have fallen below production costs and levy prices. Wholesale and ex-factory sugar prices have fallen by around Rs 700-900 per 100 kg to Rs 1,200-1,400 since October, on the back of huge output estimates and limited demand.

India's sugar output in the season ending September is seen around 28 million tonne compared with 19.3 million tonne in 2005-06 (October-September).

Clause 3 of the Sugarcane (Control) Order, 1966, takes into account the cost of production and realisation from the sale of sugar before fixing the cane price, said Naiknavare, who is here to attend the meeting. Since prices have declined considerably this year and the outlook appears grim for the next year as well, the statutory minimum price is unlikely to be raised upwards for 2008-09 season, said an industry official. Others maintained that prices may kept at par with the current and 2007-08 season. .

The sugar industry representatives will also meet Petroleum Ministry officials seeking 10% mandatory blending of ethanol with petrol across the country from November.

"We also want the state governments to rationalise the tax structure for easy transportation of the commodity," Naiknavare said.

The sugar industry has been urging the government to amend the list of goods under the Central Sales Tax, 1956, to include ethanol. Naiknavare said once under the CST list, ethanol would be removed from the purview of the state governments, which will not be able to levy any taxes like import, export, and octroi.

Under the CST, ethanol would only attract a duty of 3% and no additional taxes. The Centre's plan to roll out 5% ethanol-blended petrol across the country has hit many roadblocks. After having missed several deadlines, it has been implemented so far only in Uttar Pradesh and some southern states.