India Fixing Minimum Sugar Selling Price, An Imposition Of Stock Holding On Sugar Mills

India’s the central government has defended the policy of fixing minimum selling price for Sugar and also the imposition of stock holding on Sugar mills.

In a statement filed before the Karnataka high court in response to petitions filed by Sugar mills, the central government has claimed if crucial policy decision was not taken, the Sugar price would have come down to Rs 20 per kg and as a result a number of smaller and weaker mills, particularly from co-operative sector would have been closed.

“Further, it would have a prolonged impact on the continuation of operation in the next sugar season scheduled to commence from October 2018” the centre has said in the statement filed in response to the petition filed by NSL Sugars Limited.

On June 7, 2018, Ministry of Consumer Affairs issued a sugar control order to fix the minimum sugar price at Rs 29 per kg (Rs 2900 per quintal) and also directed the sugar producers to file monthly returns regarding sale and dispatch of while/refined sugar and also stocks held by the sugar mills.

National policy

The Central government claims that sugar price can be stabilized through the implementation of this minimum price scheme and the same was taken as part of national policy, devised carefully as a long a term measure and the same applies to all sugar mills across the country, benefitting the all the sugar mills across the country.

“The policy cannot be altered at the instance of one sugar factory, who have completely misunderstood and misconstrued the concept of stock holding limit and are intermixing it with the erstwhile system of issuing monthly/quarterly release orders” the centre has added.

Shown results
The centre has claimed that the decision to fix the sugar price and the stock holding limit on sugar mills has shown the desired result as the domestic sale price increased from Rs 25 per kg to Rs 32-34 per kg and it is currently at Rs 29-32 kg.
According to the centre, the improvement in sugar prices has enabled the sugar industry to liquidate the sugarcane price dues to farmers to the extent of Rs 4,000 and accordingly, the accumulated arrears to sugarcane farmers have come down to Rs 19,800 cr from the peak level of Rs 23,232 crore.

“The production of sugar in the current season 2017-18 is estimated to be highest ever at above 321 lakh metric tonnes as against the projected demand of 250 lakh metric tonnes. This has led to huge surplus stocks in the market which has adversely affected the market sentiments and the ex-mill sugar prices in the domestic market have fallen sharply. The total availability is estimated to be at least 363 lakh metric tonnes including opening stock at about 40 lakh metric tonnes. The closing stock at the end of September 2018 would be 113 lakh metric tonnes ” the Centre has stated.

NSL Sugars Limited had contended that the policy adopted by the central government is arbitrary and they are unable to make payments to farmers as the authorities are not permitting it to sell the sugar in required quantity in the open market. The company has further claimed the farmers will lose interest in them and their supply chain will get affected.

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