As sugar prices soar, Narendra Modi govt scrambles to nip crisis in bud

By: | Published: July 29, 2016 6:04 AM

Earlier during the day, former agriculture minister Sharad Pawar said sugar prices are expected to remain under pressure due to an estimated supply gap of 3.5-4 million tonne in 2016-17 marketing year.

Food secretary Vrinda Sarup reviewed the price situation here on Thursday in a video conference interaction with both sugar producing and consuming states.Food secretary Vrinda Sarup reviewed the price situation here on Thursday in a video conference interaction with both sugar producing and consuming states.

The government is mulling imposing stock limit for sugar millers and restricting domestic sales by fixing quota on each mill to tame sweetener’s retail prices, which are currently ruling as high as R43 per kg.

Food secretary Vrinda Sarup reviewed the price situation here on Thursday in a video conference interaction with both sugar producing and consuming states.

“The sugar price was discussed. Prices are rising because of tight supply situation created mostly by holding of stocks by millers. We are looking at imposing stock limits on millers too and reintroduce monthly release mechanism,” a senior food ministry official said after the meeting.

At present, stock holding limits are in place on sugar dealers/traders and not on millers. “The ministry is looking at checking hoarding at millers’ level,” the official said.

Currently, there is a stock holding limit on a dealer or trader for up to 500 tonne for states barring West Bengal.

The stock limit for a dealer/trader in Kolkata and extended areas of West Bengal is fixed at 1,000 tonne.

The official further said that the ministry is also considering reintroducing a release order mechanism, under which the central government decided how much each mill will sell sugar in the open market.

The release order mechanism was scrapped in 2013 when the sugar industry was partially decontrolled.

To curb price rise in sugar, the government has recently imposed 20% export duty on sugar and withdrawn cane production subsidy to the mills.

Sugar prices are rising as the domestic production is estimated to decline to 23-23.5 million tonne in the 2016-17 marketing year (October-September) as against 25.1 million tonne in the current year.

Earlier during the day, former agriculture minister Sharad Pawar said sugar prices are expected to remain under pressure due to an estimated supply gap of 3.5-4 million tonne in 2016-17 marketing year.

The Nationalist Congress Party (NCP) supremo also asked the industry to be prepared for any government action, including possibility of import of raw sugar to boost domestic supply and check prices.

“This year, sugar production situation is good. But I don’t see similar situation in the next year. In 2016-17, there will be 3.5-4 million tonnes gap in demand and supply,” Pawar said at the 74th annual convention of the Sugar Technologists’ Association of India (STAI).

Sugar rates, which at present are ruling in the range of R34-38/kg, may come under pressure due to a likely gap in supply and demand, he said.

“Next year, with a gap of 3.4 to 4 million tonnes of sugar, there will definitely be an impact on prices and the government will take some steps and the industry should be ready for that,” he noted.

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