Sugar mills in Maharashtra have got some respite this festive season, with the Bombay High Court giving directions to the central and state governments not to take any prosecution action against sugar mills for maintaining stocks above the Centre’s prescribed limits. The next hearing has been slated for November 17. Sugar prices meanwhile continued to remain steady, with traders claiming there is not much demand in the market compared with the last festive season, owing to high prices of other commodities as well.
The Maharashtra State Cooperative Sugar Factories Federation (MSCSFF) had filed a writ petition in the Bombay High Court challenging the Centre’s directives to reduce the sugar stocks of mills to 37% by October-end. The move by the government has been taken with the aim of keeping retail prices under control.
According to Jayprakash Dandegaonkar, vice chairman of the federation, this has come as a major relief to the mills before the start of the new season, since no punitive action can be taken against mills. According to him, around 40 mills in Maharashtra had stocks above the prescribed limits of the Centre and more than 20 mills had 20% more stock with them and several mills had stocks 1-2 % above the prescribed limits.
Dandegaonkar pointed out that Karnataka High Court has also given a factory an additional four months to dispose of its excess stocks on a staggered basis and a ruling of this nature augurs well for the rest of the sector.
The federation had earlier mentioned that there has been no demand in the market because of the stock limit imposed by the government and because of heavy rains in September, when the stock limit orders were issued. Traders were finding it difficult to arrange transport. “Moreover, tenders are not getting the expected response and traders are quoting very low rates and therefore the federation has filed a writ petition seeking relief and an extension of the order,” he said.
Around 50 large mills, mostly corporations linked with various political parties in Maharashtra, have failed to meet the ministry’s directive under which mills needed to bring down their stocks to 37 % of last year’s stock by September 30, as notified by the ministry early last month. These mills have a cumulative production capacity of 35-40 per cent of sugar output in the state.
Mukesh Kuvediya, secretary general, Bombay Sugar Merchants Association, said prices have remained stable for over 20 days. Prices are currently in the range of R3,680-3,902 per quintal for medium grade and R3,580-3,680 per quintal for small grade. The demand this festive season is 10-15% less than the previous year. On an average, the monthly consumption is around 20 lakh tonne and during festive season, it goes up to some 25-27 lakh tonne. But this time, the sales are yet to pick up, he said.
The higher prices of other commodities such as pulses could be one of the reasons for this, he pointed out. According to market experts, the sugar sale in the state is usually 6-7 lakh tonne on a monthly basis. Going by the Union government’s directives, mills will have to sell up to 10-12 lakh tonne of sugar in a month.
The preliminary estimates by MSCSFF are for state production of 4.5 million tonnes (mt) in 2016-17, against 8.4 mt in 2015-16 and 10.5 mt in 2014-15. The fall is attributed to drought in cane growing districts. The federation has projected a decline in cane production to 46 mt in 2016-17, against 74.3 mt in 2015-16.