Price pressure: Maharashtra sugar millers warned against selling below MSP

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Updated: March 29, 2019 2:59:14 AM

As of March 15, sugar mills have paid Rs 14, 881.01 crore of the Rs 20,653.02 crore they owed to farmers

Maharashtra sugar millers, MSP, Essential Commodities Act, MSP under Sugar Price, retail sales of sugar, gstThe National Federation of Cooperative Sugar Factories has written to all members of sugar factories regarding the strict compliance of MSP under Sugar Price (Control) Order 2018.

Maharashtra sugar commissioner Shekhar Gaikwad on Thursday issued a stern warning to millers that action would be taken against them under the Essential Commodities Act if the millers are found selling sugar under the minimum support price (MSP) fixed by the government.

On Wednesday, the Centre sought action against Maharashtra sugar millers selling below MSP amid complaints from some mill owners and industry associations that several mills were flouting rules and were underselling the sweetener.

At a meeting attended by both cooperative and private millers, the commissioner made it clear that the concept of MSP had come in after consistent follow up by the industry, and if the millers themselves sell below MSP, it would defeat the whole concept of maintaining price stability in the market, he said.

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The National Federation of Cooperative Sugar Factories has written to all members of sugar factories regarding the strict compliance of MSP under Sugar Price (Control) Order 2018.

According to the commissioner, several millers demanded action against those who have been underselling in the market, triggering a decline in the price of the sweetener. “At a time when the summer demand is at its peak, millers need to find innovative ways of selling and also go in for retail sales of sugar,” he said.

As of March 15, sugar mills have managed to pay Rs 14, 881.01 crore of the Rs 20,653.02 crore they owed to farmers as the fair and remunerative price (FRP). But, with over Rs 5,000 crore in cane dues, millers face possible action from the office of the sugar commissioner. Gaikwad has already ordered seizure of properties of 53 sugar mills that have failed to clear their dues.While the government has taken a number of measures, including increasing the minimum selling price of sugar from Rs 2,900 per quintal to Rs 3,100 per quintal, these have not helped the mills much.

Sanjay Khatal, MD, Maharashtra State Cooperative Sugar Factories Federation (MSCSFF), said that the commissioner said the data of sugar sales would be checked for the period from February 15 till date. Some of the mills that produce quality sugar have complained of poor sales in this period while sales have been high in some cases, he said.

Meanwhile, commissioner Gaikwad has written to district collectors and chief executive officers (CEOs). Such purchases are usually done through rate contracts, with the institutions floating tenders or buying from traders.
Gaikwad has asked the district collectors and the Zilla Parishad CEOs to help in the direct sale of sugar from the mills to government hostels, hospitals, ashramshalas and other institutions. The commissioner has proposed direct dealing with the mills, as part of which the government institutions can draw up contracts with them and buy sugar at the ex-mill price, with the addition of Goods and Services Tax and the transport cost to help mills raise liquidity to pay off FRP dues.

The sugar commissioner has also been pushing for the retail sale of sugar by the mills. Two sugar mills in Pune have already started selling sugar in retail and other mills are being encouraged to take the same step.

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