Sugar mills in Maharashtra are opposing the Centre’s decision to impose stock limit on the amount of sugar they can hold.
Food and consumer affairs minister Ram Vilas Paswan tweeted over the weekend that each sugar mill should not hold over 37% of total sugar available with it during the 2015-16 sugar season (Oct-Sept). The move is aimed at taming sugar prices ahead of the festival season.
“After deregulating the sugar industry, the Centre is indirectly trying to put stock limits on sugar factories. Because of this, the sugar rates have fallen down by R150 to R200 per quintal. The government should urgently intervene to provide relief to the sugar industry, which is in dire straits,” said Jayprakash Dandegaonkar, vice-chairman, Maharashtra State Cooperative Sugar Factories Federation (MSCSFF).
The imposition of stock limit will lead to fall in sugar prices, Dandegaonkar said, alleging that it has been deliberately done to help sugar traders. He said the sugar sector is in crisis because of unfavourable conditions and adverse policies.
As per market reports, factories in Kolhapur district have stocks of up to 57% and those in Sangli district 44%, and a total of 3.2 million tonne of sugar is expected to hit the market in September. Factories will scramble to unload stock on to dealers, who in turn may push it out to the market immediately, if their stock limits don’t permit them to hold more, industry experts said.
“There has been major uncertainty with regard to policies for the sector in the last six months. Restrictions have been imposed on exports when the international market rates were favourable for India. The decision for blending of ethanol to the tune of 12.5% has been prolonged. And now stock limits have been imposed. Millers have been unable to pay FRP because of financial burden,” Dandegaonkar said.
According to him, mills in Maharashtra have been seeking restructuring of their soft loans and excise loans taken a couple of years ago. Mills say that they are not in a position to make the payments for the first repayment of the soft loan of R3,200 crore that they had availed during the period 2013-14 and 2014-15.
According to Shivajirao Nagawade, chairman, MSCSFF, the last couple of seasons have been bad for the millers. Around 69 factories have ended up with losses of R900 crore for the 2014-15 season and the total accumulated losses by the mills in the state are around R2,900 crore, he pointed out.