Centre has warned against stocking sugar for more than 15 days

Even before the Centre’s stockholding limit order on sugar for bulk consumers and dealers has come into effect, the government is being pressured by multinational manufacturers of cold drinks, ice-cream, confectionery and food processing units to withdraw the order. Even some sugar factories, for which these big consumers are bulk buyers, have lent their voice to the demand.

Retail sugar prices have more than doubled from Rs.16 a kg a year ago to Rs.32-Rs.35 a kg in the open market due to supply-side shortages. Although, prices have started sliding in the wholesale market in the last two days as stockists have started offloading, the fall is yet to reflect in the retail market.

It is believed that the bulk buyers of sugar — in anticipation of the rise in price of sugar due to low acreage under sugarcane — cornered stocks for six months, creating an artificial shortage in the market.

The Ministry of Food and Public Distribution cracked the whip through its order issued on August 22, that said that “no person, establishment or industrial unit consuming more than 10 quintals of sugar per month as a raw material for production or consumption or use in any manner shall keep in stock at any time sugar exceeding 15 days of such use or consumption.” The order shall come into effect on September 19 and shall remain in force till six months.

Offloading stocks

Bulk buyers of sugar, including manufacturers of cold drinks, ice-creams, confectionery etc., who consume almost 65 per cent of the country’s sugar production, will now have to offload their excess sugar stocks in the market, thus improving availability. The government says they can import sugar at zero duty for their consumption instead of cornering domestic production.

Despite the Central government holding meetings with the Chief Ministers, the Food and Agriculture Ministers to seek their cooperation in controlling prices of essential commodities, some States have not so far notified stockholding and turnover limits on dealers of sugar and khandsari. Uttar Pradesh is one of them.

The Department of Food and Public Distribution has written to all States to notify the stockholding limits and put in place the necessary licensing mechanism to implement the order.

On the other hand, there are States such as Madhya Pradesh, Maharashtra and Rajasthan that have unearthed sugar hoarded for speculation and black-marketing.

Sources said five million tonnes of raw sugar had been contracted so far, of which 2.16 million tonnes had arrived. Of the 5.02 lakh tonnes of refined sugar contracted so far, 1.60 lakh tonnes had arrived.

Moreover, the government made available over 24 lakh tonnes of sugar for September. Increased availability will arrest the galloping sugar prices during the festival months of September and October.

Sugar production is estimated at 150 lakh tonnes this year. Next year too, with a depleted carryover stock of about 27 lakh tonnes, the sugar output is expected to be about 160 lakh tonnes keeping alive concerns about availability and prices.