Sugar: Working at cross purposes

Mint has two reports, which reminds me of what Milton Friedman said in one of the episodes of Free to Choose - government departments working at cross purposes.

Report one:

Sugar mills prohibited from selling entire production at market rates | Sugar mills prohibited from selling entire production at market rates:
India, the world’s biggest sugar user, has no plans to allow sugar mills to sell their entire production at market rates, farm minister Sharad Pawar said.

“I don’t have any proposal and neither are we thinking about it,” Pawar said.

India may allow mills to sell their entire production at market rates from 1April as the government seeks to decontrol the sugar industry, a leading newspaper reported.
The government may spend more than $225 million (Rs 1001 crore) to sell sugar at below market rates to the poor through ration shops, replacing the so-called quota system, the report said. The levy obligation requires producers to sell 10% of their output to the government at below-market prices for resale to the poor.

Indian sugar producers can sell 90% of their output at market rates, while the government usually fixes the quantity and time of the sale every month.

Report 2:

Govt mulls over sugar export subsidy | The government is considering giving an export subsidy for sugar to mill owners in the wake of fears of glut in the domestic market : The government is now considering giving an export subsidy for sugar to mill owners in the wake of fears of glut in the domestic market.“The matter (of sugar export subsidy) is still under consideration of the government,” Singh said.
Global sugar prices, which stood at over 450 dollars a tonne when its exports were banned in July 2006 to check rising prices in the local market, have since declined to around 335 dollars per tonne.