Cooperative sector sugar mills across the country have stated that the impact of the stock limit will dampen the cooperative sugar sector.
Cooperative sector sugar mills across the country have stated that the impact of the stock limit will dampen the cooperative sugar sector. The National Federation of Cooperative Sugar Factories (NFCSF) has expressed concern that the decision to impose stock limits is likely to result in dropping the ex-mill realisation below the current levels of Rs 3,650 per quintal in addition to GST and this may adversely affect the timely cane payment to farmers across the country. The food ministry has imposed limits on stocks sugar mills can hold during September and October, in a bid to discourage hoarding and curb any potential price rise during the festival season.
Food minister Ram Vilas Paswan tweeted on Tuesday the stock limit for September has been fixed at 21% of the total sugar available with the mills during entire 2016-17 marketing year (October 2016- September 2017) and that for October is kept at 8%. Dilip Walse Patil, president of the Federation pointed out that cooperative sugar mills in Maharashtra, Karnataka, Gujarat and Haryana have been regularly selling sugar at a uniform pace. This was in line with the sentiment and advice given by the government, he said. In fact, following this advice and maintaining a uniform pace of selling had helped maintain ex-mill sugar prices between Rs 3,600-3,650 per quintal, excluding GST.
This, in turn, had stabilised the maximum retail price of sugar at Rs 40-42 per kg across the country, he said. Against this background, the recent stock limits imposed for September and October is uncalled for, he said. The national federation is an apex body representing 264 cooperative mills and 9 state cooperative federations across the country. The total sugar stocks across the country are around 60 lakh tonnes. Patil expressed concern that this step could adversely impact timely cane payments to farmers. Contrary to misgivings of the cooperative millers’ alleged tendency to hoard, Patil has put on record the state wise figures of cooperative mill sales vis-a vis stocks with Maharashtra at 77%, Karnataka at 83%, Gujarat at 71%, Haryana at 70%, Andhra Pradesh at 88%, Punjab at 73%, Tamil Nadu at 87%, and Uttar Pradesh at 78%.
In light of the data maintained by the federation, there does not seem any possibility of any state holding stocks above 21%, Prakash Naiknavare, MD of the cooperative millers federation said. When contacted, Shivajirao Nagawade, chairman, Maharashtra State Cooperative Sugar Factories Federation said that the move to impose stock limits on mills would ultimately impact prices. Sanjeev Babar, MD of the federation agreed, stating that mills may have to sell around 8-9 lakh tonnes of sugar next month which could impact prices by 50 paise to Rs 1 per kg. Moreover, this would impact margins of mills making it difficult to make cane payments to farmers and also pay up excise duty loan installments, he added.
Mukesh Kuvediya, secretary general, Bombay Sugar Merchants Association said that prices dropped by Rs 10 per quintal after the Centre’s announcement. Prices for S-30 grade at Rs 3,780-3,890 per quintal and Rs 3,850-4,050 per quintal for M-30 grade and prices dropped by Rs 10 on Wednesday, he said, adding that by next week, prices could further fall by Rs 20-30 per quintal.