Sugar: Govt places stock limits to curb price rise

The Government on Tuesday placed stock limits on sugar mills in an effort to check spiralling of sugar prices during the forthcoming festive season.

Sugar mills in the country cannot hold more than 21 per cent of the total output of the current 2016-17 season in stock during September.

This needs to be brought down to 8 per cent by the end of October, the Food and Consumer Affairs Minister, Ram Vilas Paswan, said on Twitter.

The move is an attempt by the Government to restrain sugar mills from hoarding up stocks in order to push up prices when the demand for the sweetener spikes during the festival period.

However, Paswan said there was no shortage of sugar for domestic consumption. Monthly demand for sugar in the country is estimated to be 2 to 2.25 million tonnes (MT) and this demand peaks during the festival months.

Under the sections of the Essential Commodities Act of 1955 and the Sugar (Control) Order of 1966, the power is vested with the Government to limit the stocks available with the sugar mills in the country.

The Government issued a similar notification last year, too, but the holding limit available to the mills was 37 per cent and 24 per cent of total sugar available with them by the end of September and October.

Indian Sugar Mills Association (ISMA) welcomed the Government decision saying it was taken by “balancing the interests of the consumers on one hand and the sugarcane farmers and producers on the other hand”.

“The stock-holding limit prescribed will hopefully ensure sufficient supplies in the festival season and also leave a reasonable balance before the new sugar from the next sugar season comes into the market, said ISMA Director, General Abinash Verma, in a statement here.

Being a low-production year, sugar mills have been generally selling reasonable quantity of sugar so far, and hence the decision would impact only those mills that were not selling sugar at par with others, he said.

The pressure to sell more would fall only on 150 of 530 sugar mills in the country, the association said.

About two weeks ago, Paswan was quoted as saying that there was a total sugar supply of about 27.9 MT in the current 2016-17 season (October-September) despite a 20 per cent slump in production.

The total quantum includes current year’s production of 20.4 MT, an old stock of 7 MT and the import of 5-lakh tonnes.

The shortage in sugar production this year is on account of shortfall in sugarcane yield in 2016-17. While the target for the previous year was 355MT of sugarcane, the yield is estimated to be only 306.7MT, according to the fourth advance estimates of crops for 2016-17, released earlier this month. The production in 2015-16, on the other hand, was 348.4 MT.