Sugar mills in Maharashtra are miffed with the Centre’s directive to reduce their sugar stocks to 37 per cent by this month-end, a measure aimed at keeping retail sugar prices under control.
The Union government, in a letter dated September 8, has asked every sugar mill in the state to keep only 37 per cent of its stock, thus pushing them to offload the rest by September 30.
The sugar stock limit (37 per cent) allowed under this quota would not include exports. There are 177 sugar mills in Maharashtra.
“The sugar sale in the state, on an average is 6-7 lakh tonnes. Going by the Union government’s directives, mills will have to (over) sell up to 10-12 lakh tonnes of sugar before September 30 (to meet quota obligations). It means sugar will be sold at lower rates and mills would incur losses,” Managing Director of Maharashtra State Cooperative Sugar Factories Federation Ltd (Sakhar Sangh) Sanjeev Babar told PTI.
When asked about the likelihood of other states facing a similar situation, Babar said, “Some states neigbouring Uttar Pradesh — the largest in terms of sugar mills — do not produce sugar. Hence UP (sugar) mills get better rates (even during heavy selling). However, the neighbouring states of Maharashtra such as Gujarat, Andhra Pradesh and Karnataka are major sugar producers. Thus, the state would not fetch better rates like UP.
Besides, he said, the Centre has already withdrawn its export subsidy to mills, which has come as a setback to them. Now, the government is forcing mills to sell their sugar at lower rates compounding their problems.
Also, the fresh directive has brought down wholesale sugar prices by Rs 150-200 per quintal. At present, sugar is traded in the wholesale market at Rs 3,200 per quintal, he said.
The sugar rates were around Rs 3,400 a quintal a couple of months back, but downfall began with various restrictions introduced by the Union government, Babar claimed.
Sugar mills in Maharashtra have already exported 10 lakh tonne sugar so far.