Maharashtra govt seeks differential pricing for sugar

The Maharashtra government has written to the Centre seeking differential pricing for sugar.

Confectionery and beverage makers could pay more, while domestic consumers pay less for the same quantity.

The more expensive industrial sugar could provide additional revenues to the cooperative mills. But experts feel that such an arrangement would be difficult to implement.

Sources in the government said the proposal has been sent keeping in mind the deteriorating financial health of the cooperative sugar mills. The logic behind the move is that the sugar mills will charge higher prices from the industrial consumers and use the surplus revenue to pay higher prices to the cane farmers.

A similar model operates in the electricity sector where the industrial consumers pay higher power tariff, while residential power consumers pay a smaller amount.

The farmers have been demanding higher prices for sugarcane but the mills, which are mostly from the cooperative sector, are unable to pay due to their unhealthy balance sheets. Over the past couple of years, Maharashtra State Cooperative Sugar Factories Federation Ltd, which is the apex body of the cooperative sugar mills, has been discussing the issue with the Centre.

The Managing Director of the Federation, Sanjeev Babar, told BusinessLine that differential pricing has been a demand of the sugar mills but the modalities of implementing such a scheme have never been easy.

Babar said that implementing the scheme could require sugar to be sold from the ration shops. The sugar mills will also have to reserve a certain percentage of their produce for such a sale.

Agriculture expert from Kolhapur, Raosaheb Pujari, said such price differentiation would lead to malpractices.

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