Sugar cos upbeat on prices, but govt keen on Rs 40/kg cap

The domestic sugar industry continues to be very bullish on sugar prices despite imposing stock limits and export duty, reports CNBC-TV18 from the Global Grain, Food and Feed 2016 and the Sugar Summit Asia held in Pune. The ministry officials on the other hand say they will not let sugar prices go beyond Rs 40 per kilogram.GS Sahu, Chief Directorate - Sugar at Ministry of Consumer Affairs says prices are at desired levels but they should not rise above this rate. He is of the opinion the global shortage will not impact India in any way.BK Anand, Head-Grains and Oilseeds at Cargill India, says if production does not improve in the country, we may have to depend on trade. So it should be encouraged by the government. Below is the verbatim transcript of GS Sahu and BK Anand’s interview with CNBC-TV18's Manisha Gupta.Q: What is your sense, where is the industry headed? Sahu: Industry is right now comfortable because last 4-5 years we have a very surplus production than our domestic requirement. We have taken a number of steps for the welfare of farmers, industry and general consumers. As a result now the industry has come up with a good - I mean price is moving up. Now they have come to a viable stage, they are comfortable with the price and we are also watching the price. The price is now as per desired level.Q: So, Rs 40/kg is what we see the price has come in as. Do you see prices rising further because in the Indian markets we are looking at lesser crop. In the international markets as well we are looking at a global deficit now.Sahu: That is fine, but right now the all India retail price is on an average is Rs 40. I think that is comfortable, that is okay for us and we are trying that it should not cross beyond this.Q: What is your sense, because the government is making so many efforts also. We saw talk about stock limit and there is an export duty being talked about as well. That is the case in many commodities. The oil seed prices are going up. The pulses prices are going up as well. What is your sense on whether these steps actually do make an impact on prices, curbing them actually?Sahu: The price right now is in the controllable stage and for preventing further rise we have already imposed stock limit. With that help that will take care of price part. As far as global shortage is concerned, we have enough stock, that will take care of our domestic requirement. Global shortage will not impact our country.Q: You said Rs 40 is a very comfortable price and government perhaps doesn\\'t want the prices to run up from here then. Is there a range that the government is working within sense of sugar prices?Sahu: No range. The all India average retail price is Rs 40/kg. We are okay with this and beyond that we will not allow it beyond Rs 40. We will try to control it as much as possible.Q: What is your sense on rise in prices and whether we will now be in a stable mode?Anand: I think if you look at the stock to use ratios in the world, they are still very comfortable. For 2016-17, we will have to see the change in the weather system from El Nino to the neutral to La Nina, is going to play its role in the different parts of the world, especially on to the producing regions. So, if we are able to make the crops this year as well and I wish that we should, the stock to use is going to stay wherever it is.So, fundamentally, I don\\'t see that there is a reason of concern or worry as of now because the markets are coming down from way under. They were at record bottoms. If there\\'s a little bit of a spike that\\'s happened it\\'s not a big concern.Q: Whether it is grains or sugar or pulses everything seems to be running up. Are you concerned in any one pocket where you could see an immense run up even from here?Anand: So all the three, they have very different dynamics. So, the grains have different dynamics. If you talk about the food grains and the feed grains there the situation is relatively more comfortable. Sugar I am no one to comment on that but looks like we have seen so far as India is concerned super reaction into the sugar prices from Rs 18 to Rs 36 or maybe plus than that.Pulses is something which we don\\'t trade, we don\\'t deal with but we keep an eye on the complex to keep an overall watch on the agriculture situation there is a shortfall into the supply. So, what we need to do is we need to address the supply side constraint and augment it and how do we augment it is going to only help the prices here. There are two ways to augment it. One is that we should increase the productivity and that is the core, we must do everything possible whatever we can and the second is that we should allow the trade flow to move as freely as possible why because, India being the largest vegetable protein consumer the productivity issues if they are not going to get addressed in the near term which is in like next 2-4 years.Q: So, what you are saying is that the steps that the government is taking in terms of stock limits and harassing many of the dealers and putting import and export duties, making changes in that. Do you think all of that will work, is that a very near term solution?A: I would not like to comment on what the government actions have been in the past but the point is that they are necessary at certain point in time but if they are - or the government interventions can be done more in terms of augmenting the supply and the interventions by the government can be made on that front they are only going to help the situation more than the essential commodity act. So, we had actually removed the essential commodity act to a large extent in 2002, we have brought it back in 2006. The fact of the matter is the country is growing fast which is a very good news, the Gross Domestic Product (GDP) is growing is growing, the incomes are rising, people are growing to move from the calorie to nutrition. And if they move from calorie to nutrition then the major source of nutrition for us in India is the milk and the pulses. So, the sooner we do something for the productivity so that these questions of the intervention they does not arise only and that is going to help all of us I believe.