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Govt allows unrestricted exports of sugar and onions

03 May 2012 Evaluate

The government has freed the exports of sugar and scrapped the minimum export price of onion. It has also decided to set up an expert panel to formulate a policy to handle surplus foodgrains in view of storage crunch. Sugar and onions are items that are considered to be ‘sensitive’ because of their effects on household inflation and have been watched and regulated closely by the government.

However of late there have been complaints from sugar mills and farmers’ alike saying that the regulation is proving harmful to their business. India is the largest consumer and the second largest producer of sugar in the world. The sugar industry is completely controlled by the government, right from the level of production to distribution. The food ministry allocates the quantity of sugar to be sold in the open market every month.

Exports of the sweetener are also controlled by the government keeping in view the domestic demand.  However, off late the mills have been demanding that sugar exports be allowed as cane arrears have been piling. With the present move, mill owners will be able to clear cane arrears of over Rs 10,000 crore to farmers. Also millers will now be also able to export sugar freely under the open general licence. ‘We will review it once sugar exports reach a particular level,’ Food Minister KV Thomas said.

The scrapping of the minimum export price (MEP) of onion is also expected to help farmers make Indian onions more competitive in the international market. India is the second largest producer of onions in the world but has been facing stiff competition from China and Pakistan. Hence farmers have been demanding that the MEP be scrapped to help them make onions more competitive.

Apprehending that storage crunch would damage foodgrain during monsoon season, it was also decided to set up a panel, headed by Rangarajan, to recommend ways to handle surplus foodgrains stock lying in the central pool. The committee, comprising officials from Agriculture, Commerce, Food and Finance Ministries, has been asked to submit its recommendation in a shortest span as possible. The country is estimated to have produced a record 103.41 million tonnes of rice and 90.23 million tonnes of wheat in the 2011-12 crop year (July-June).

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