Narendra Modi government insists there’s no sugar shortage, says country is in a sweet spot

By: | Published: February 22, 2017 6:28 AM

Despite speculations of a massive shortage of sugar, the government feels the country has adequate stocks to meet consumption in the current marketing year through September, thanks to carry-forward stocks of 7.1 million tonnes from 2015-2016...

Even according to ISMA data, offtake of sugar dropped as much as 7.5 lakh tonnes between October 1 and January 31 from a year earlier, mainly due to demonetisation. (Reuters)

Despite speculations of a massive shortage of sugar, the government feels the country has adequate stocks to meet consumption in the current marketing year through September, thanks to carry-forward stocks of 7.1 million tonnes from 2015-16, reports Banikinkar Pattanayak in New Delhi. The ministry has retained its earlier production forecast of 22.5 million tonnes for 2016-17 for now, official sources told FE, which is higher than the 21.3 million tonnes projected earlier by millers’ body ISMA and just 20 million tonnes estimated by some refiners and traders.

The food ministry held a meeting with representatives of sugar mills on Tuesday to discuss prices, supplies and consumption of the sweetener as well as cane arrears, the sources said.

That the pace of price rise has slowed lately despite strong speculations about a shortage and offtake of sugar has dropped from a year before points to the fact that there is ample availability of sugar in the market, the sources said. According to official data, the monthly average price of sugar in the wholesale market rose just 6.8% since June last year, against an almost 19% jump between January and May 2016.

“There is no change to the estimate as of now. If there is any need for a revision, the government may do so, but only after consulting cane commissioners. But no change is expected before late March. There is absolutely nothing alarming about the supply situation,” said a senior government official.

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The food ministry may convene a meeting with cane commissioners of key producing states in late March.

Sugar production has been hit hard by dry spells in Maharashtra and Karnataka, although Uttar Pradesh is expected to witness bumper production in 2016-17. This has led to a call, especially by refiners and traders, for scrapping or trimming a 40% import duty on sugar.

Consumption may drop to around 24.2 million tonnes in 2016-17, against 24.8 million tonnes a year before, going by the trend of offtake so far, they said.

Even according to ISMA data, offtake of sugar dropped as much as 7.5 lakh tonnes between October 1 and January 31 from a year earlier, mainly due to demonetisation. Even if consumption grows at a steady pace of 2% for the rest of the marketing year, demand will touch almost 24.3 million tonnes. In fact, subdued offtake was witnessed in October as well, even before demonetisation was announced on November.

One of the sources said the carry-forward stocks from 2015-16 and production in the current year will be enough for consumption approximately up to the second month of the next marketing year (November), by when supplies of sugar from the new cane crop would hit the market.

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