The Hindu Business Line : Maharashtra millers seek extension of FSQ validity

New Delhi, Sept. 21 Sugar mills in Maharashtra have sought an extension of the validity period of the current month’s free sale quota (FSQ) till October 15, even while alleging collusion among traders in bringing down ex-factory prices.

For September, the Centre has released 12 lakh tonnes (lt) of FSQ sugar for mills to sell in the open market. In addition, there is a dismantled ‘buffer stock’ quantity of around 9 lt — that was earlier sequestered on government account – that factories are required to dispose of by the month-end.

The total sugar available for open market sale during September, thus, works out to roughly 21 lt. This is as against the 13 lt FSQ released in September 2007. “Never before have such large quantities of sugar been released for this month,” noted Mr Prakash Naiknavare, Managing Director of the Maharashtra State Cooperative Sugar Factories Federation.

The obligation to offload the entire quantity before the month-end has, in turn, led to private traders “playing havoc” and forcing mills to reduce prices. Mills normally sell their sugar through a tendering process, in which sealed offers are invited from traders and the highest bidder lifts the tendered quantity.

“Knowing fully well our compulsion to sell, they have now stopped participating in tenders. Even when they do, the traders make token bids for 150-200 bags (each of 100 kg) in each auction, whereas earlier they were lifting 5,000-10,000 bags,” Mr Naiknavare claimed.

The result: Since the start this month, ex-factory prices have fallen from Rs 1,900 a quintal to as low as Rs 1,480, marginally recovering to around Rs 1,550. On the other hand, prices to the end-consumer has not fallen as much, “as the traders are taking full advantage of festival demand, first on account of Ganesh Chaturthi and now Ramzan-Id”, he added.

Urging for an extension of the current month’s FSQ, Mr Naiknavare said the current monthly release policy was benefiting neither cane growers/mills nor consumers. “It is high time the Centre lifts controls on the industry that are currently only favouring the interests of traders,” he stated.

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