Gargi Parsai

Retail price has shot up in the last three months

Fall in sugarcane output due to excess rain in some States

Centre imposed ban on sugar exports last September

NEW DELHI: Rising prices of sugar have turned it bitter for consumers on the eve of elections and this has the Central government worried.

Sugar prices have shot up by 47 per cent in the domestic market in the last one year. The recent decision to allow import of raw sugar and impose stock-holding limits has not so far had much of an impact on its retail price, which has shot up steeply in the last three months.

There are fears that sugar prices will not decline from an average of Rs.25 a kg before the commencement of the general elections next month, just as wheat prices have come to stay at an average high rate of Rs.13 a kg, atta at Rs.15 a kg, urad dal at Rs.46 a kg, masoor at Rs.60 a kg, mustard oil at Rs.74 a kg and milk at Rs.21 a kg in the retail market.

According to official figures, sugar prices that were ruling at Rs.17 a kg a year ago, have shot up to Rs.25 a kg in Delhi markets. Central government’s own cooperative stores are selling the commodity at Rs.26 a kg (packed). Prices of open sugar range between Rs.24 and Rs.28 a kg, with no indications of any decline in the near future.

What is causing concern in government circles is that the futures price of sugar is showing a continuous rising trend. The futures price quoted on the National Commodity and Derivatives Exchange (NCDEX) at the end of last month for delivery in Maharashtra (M-grade) showed a rising trend from Rs.21.23 kg in March to Rs.24.40 a kg in September 2009.

This is attributed to a significant shortfall in sugarcane output expected this year due to vagaries of weather and excessive rainfall in parts of States such as Maharashtra, Punjab, Haryana, Bihar. This affected the sucrose content in sugarcane and thus the recovery of sugar.

Consequently, the sugarcane output is expected to be 170 lakh tonnes this year against 263 lakh tonnes last year. Till September last, the industry was allowed to export sugar and consequently, about 60 lakh tonnes was exported.

Now, to tide over the situation of rising prices, the government imposed a ban on exports last September.

The Central government also allowed the import of raw sugar under the Advanced Authorisation Scheme up to September 2009.This sugar has to be processed and sold in the domestic market with the obligation on mills to export processed sugar on tonne-to-tonne basis in 36 months. This will allow mills to operate for a longer period as well as facilitate availability of sugar in the domestic market.

Sources said the government was likely to take further steps to ease the situation such as releasing additional free sale quota.