Future of sugar industry: Experts discuss

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Future of sugar industry: Experts discuss

As the sugarcane price issue becomes contentious, CNBC-TV18 speaks to experts from the industry to understand the implications.

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The winter session of the Parliament kicked off yesterday amidst protests from opposition parties against the government's move to impose fair and remunerative price (FRP) mechanism for sugar. The Parliament was adjourned yesterday after the protests increased.

Also read: Sugar protest forces Parliament to shut down on first day of winter session

In the evening, the Prime Minister finally gave into political pressure saying that he would amend the sugarcane pricing ordinance in farmer interest. In a latest development it has been learnt that both the houses of the Parliament have again been adjourned on sugarcane price issue.

Is it the death of FRP or is it just a temporary stalling? How will sugar companies do with or without FRP next year?

While Narendra Murukumbi Managing Director at Shree Renuka Sugars hails the FRP concept, Investment Advisor SP Tulsian considers it to be an ill-conceived move and says that the farmers should be happy with Rs 210 per quintal.

However, Murukumbi says, "We are currently paying Rs 230 per quintal in Karnataka." Cane prices need to be resolved bilaterally-two-third share to farmers would be fair, he adds.

Sugar deficit is a global phenomenon. "Last year there was a deficit of about nine million tonne. However, this year's deficit is probably five-six million tonne and prices have reacted accordingly," says Kingsman Sa's Managing Director Jonathan Kingsman. Though the situation is expected to remain tight, there is a possibility that we move to a surplus from a deficit in 2010-11, according to Kingsman. He expects prices to be maintained in the next few months.