The unsatisfactory response of some sugar mills to a government order directing dismantling of two buffer stocks totalling around 5.0 million tonne has made the government to believe that some amount of the buffer may have actually been exported without its knowledge.
Sources has said, although, there is no concrete evidence that such exports have actually taken place, the reluctance on the part of some mills to file returns regarding the dismantle points towards such exports.
“If the unsold stock was lying with the mills then there is no reason, that they should not disclose,” a senior government official said. Sources said that the government got concerned that though it had released additional quota of free sale sugar in August and was hopeful that another 350,000-400, 000 tonne would come into the market by way of dismantled stocks, prices didn’t show any appreciable decline.
“We had expected around 2.7 million tonne of additional sugar would be released into the open market because of dismantling of the buffer stocks, but hardly 800,000 tonne arrived, which raised the suspicion that mills were not liquidating the entire quantity of dismantled buffer stocks into the market leaving the supply pipeline dry,” officials said. Earlier, this month, the government asked sugar mills to convert all unsold stocks out of the dismantled first and second buffer stock and normal monthly quota into ‘levy sugar’ or the sugar sold through the public distribution system. The unsold stocks would be converted into levy sugar if not sold in open market by September 30.
The government by a order in July dismantled the sugar buffer stock of 20 lakh tonne that it had asked mills to create last year and allowed them to sell the dismantled buffer stock in the domestic market at any point of time during 2007-08 sugar season that ends October. Later, the government also allowed dismantling of the second lot of the sugar buffer stocks of 30 lakh tonne and allowed mills to sell 25% of the stock in August and September, while the remaining 75% at any point of time during the 2008-09 sugar season.