By IANS
New Delhi : There is a strong need to examine whether sugar should be considered an essential commodity as most of it is consumed by the industrial and small business segments, says a report.
In a comprehensive report "Indian Sugar Industry -Sector Roadmap 2017", by KPMG quoting a study by AC Nielsen, said more than 61.5 percent of free sale sugar is consumed by industrial and small business segments, while high income households with monthly income of more than Rs.5,000 account for approximately 12.8 percent.
This leaves a mere 25.7 percent in the lower income group, which consumes just two to three kg sugar per month per household.
Therefore, the report has recommended the need to examine whether sugar should be an essential commodity and its importance reduced in the Wholesale Price Index (WPI).
The roadmap would enable the sugar sector to achieve its shared vision over the next 10 years with its implementation dependent on the sugar industry recovering from the current state of unsustainable low prices.
The report says that apart from catering to the world's largest sugar consuming population, the industry can emerge as a significant source of electric power through co-generation as well as of fuel ethanol for blending with petrol.
"This co-generation opportunity can add 9,700 MW power capacity to meet almost 6 percent of additional power requirement by 2017 and generate almost 10 million carbon credits," said Arvind Mahajan, executive director of KPMG Advisory Services.
The report said given the scarcity of additional fertile land, increase in farm productivity will be critical for sustaining the future growth of the industry.
It evaluates key drivers for increasing farm productivity and identifies the policy modifications needed for achieving the same, including further strengthening of farmer-miller relationship.
Other transformational opportunities include better price risk management and alignment of cane and sugar prices across the country. It suggests that the minimum distance between mills should account for regional variations, with a national minimum benchmark of 25 km.
The report suggested creation of strategic stock for sugar that would enable the government to intervene as a market participant rather than through the monthly release mechanism.