Ex-Mill Sugar Prices Fall 20% as Government Steps Up Measures to Curb Hoarding and Ensure Adequate Supply.
New Delhi:
Ex-mill sugar prices have declined by around 20% in recent days, while retail prices have also begun showing a downward trend, following a series of measures taken by the Government to improve market availability and prevent artificial tightening of supplies.
The Government has said that the recent spike in sugar prices was primarily driven by hoarding, speculative activity and delayed movement of stocks rather than any actual shortage. With adequate sugar stocks available across the country, authorities have intensified monitoring of production, stocks and movement to ensure that supplies reach consumers in a timely manner.
According to the Government, retail sugar prices are also expected to decline further as the reduction in ex-mill prices gradually passes through the supply chain.
Physical Verification Confirms Adequate Sugar Stocks
A nationwide physical verification drive conducted at sugar mills has reaffirmed that the country has sufficient stocks of sugar.
In several instances, mills were found to be holding stocks higher than the quantities declared in their monthly returns submitted to the Government. The verification exercise has established that there is no shortage of sugar in the country and that there is no justification for panic buying or excessive stocking.
The Government also found instances of sugar mills resorting to short selling, under which mills sell less sugar than the quantity allocated to them under the monthly quota. Authorities have noted that such practices can unnecessarily restrict market supplies despite adequate physical availability.
Fortnightly Sugar Quota System from September
To ensure faster movement of sugar and prevent artificial scarcity, the Government has decided to introduce a fortnightly sugar allocation system from September, replacing the existing monthly quota mechanism.
Under the new system, sugar mills will be required to sell at least 40% of their allocated quantity during the first week, with the remaining quantity to be sold in the succeeding week.
The fortnightly allocation mechanism is expected to help the Government:
– Monitor demand and supply more closely.
– Respond quickly to changes in market conditions.
– Prevent artificial tightening of supplies.
– Release additional quota whenever necessary to maintain adequate market availability.
The new system is aimed at making sugar supplies more closely aligned with actual domestic demand and reducing the scope for delayed lifting, hoarding and speculative stocking.
Sugar Must Be Dispatched Within Seven Days of Sale
Sugar mills have also been directed to ensure that sugar sold to buyers is dispatched from the mill within seven days of the sale.
The Government expects the combination of fortnightly quota allocation and mandatory dispatch within seven days to substantially improve the movement of sugar through the supply chain.
The measures are intended to ensure that sugar moves quickly from mills to dealers and ultimately reaches consumers, while discouraging unnecessary accumulation and speculative holding of stocks.
Bulk consumers have also been advised not to maintain sugar inventories beyond their operational requirements.
New Sugar Season Expected to Boost Availability
The availability situation is expected to improve further with the commencement of sugarcane crushing for the new season from October 15.
More than 10 lakh tonnes (LMT) of sugar are expected to be produced during October. The Government has permitted sugar mills to sell sugar produced during October without restriction, allowing new-season production to enter the domestic market at the earliest.
Production is expected to rise substantially in November, with around 45 LMT of sugar projected to be produced, providing significant additional supplies for domestic consumption.
In addition, operational sugar mills in Karnataka and Maharashtra are expected to contribute around 2 LMT during September, further strengthening availability ahead of the festive season.
Government Assures Consumers of Adequate Supply
The Government has reiterated that there is no shortage of sugar in the country and assured consumers that all necessary steps will be taken to maintain adequate and continuous supplies at reasonable prices.
The measures are particularly aimed at ensuring sufficient availability during the forthcoming festive season, when domestic demand for sugar traditionally increases.
Key Developments
– Ex-mill sugar prices have fallen by around 20% in recent days.
– Retail sugar prices have also started declining, with further reduction expected as lower ex-mill prices pass through the supply chain.
– Physical verification of stocks has confirmed adequate sugar availability across the country.
– Several mills were found to be holding higher stocks than declared in their monthly returns.
– A fortnightly sugar quota system will replace the monthly quota system from September.
– Mills will be required to sell at least 40% of their allocation in the first week, with the balance to be sold in the succeeding week.
– Sugar sold by mills must be dispatched within seven days.
– Bulk consumers have been advised against excessive stock accumulation.
– Sugarcane crushing for the new season will begin from October 15.
– Around 2 LMT of additional sugar is expected from operational mills in Karnataka and Maharashtra during September.
– More than 10 LMT is expected to be produced in October and around 45 LMT in November.
The Government said the combination of adequate stocks, closer monitoring, faster dispatch, flexible quota allocation and increased new-season production will help maintain stable sugar supplies and prevent artificial price pressures in the domestic market.
