To discourage hoarding and curb a price rise in sugar, the food ministry has fixed the limit of stocks a dealer or trader can pile up at 500 tonnes for states, barring parts of West Bengal, under the stock-holding rule.
The stock-piling limit for a dealer in Kolkata and extended areas in West Bengal has been set at 1,000 tonnes, according to a notification by the food ministry. FE was the first to report the stock-piling limits on May 2.
Dealers can’t hold sugar for more than a month from the day of receiving the stocks, the food ministry said.
Domestic sugar prices climbed around 40% since the current marketing year started on October 1, 2015 on fears that sugar output in 2016-17 could drop by as much as 14% from a year before. Already, according to the estimate by the Indian Sugar Mills Association, the country is likely to produce 25 million tonnes of the sweetener in 2015-16, down 11.7% from a year ago.
To ensure that sugar prices don’t surge due to manipulations by hoarders, the Cabinet on April 27 decided to introduce, after a gap of close to five years, the stock-piling limits.
States are free to fix stock-holding limits as well as the period of holding sugar, but those can’t be higher than the caps set by the food ministry. In late 2011, the government had scrapped the stock holding limit on sugar due to plentiful supplies.
The latest move, however, comes as a setback for sugar mills that have witnessed losses for almost three years due to the fixing of cane prices at elevated levels, mainly by states like Uttar Pradesh (although even the price fixed by the Centre was too high to pay last year). Elevated debt levels have compounded their woes.