Sugar traders seek Centre’s intervention as prices surge

In its letter to Union Minister of Consumer Affairs Piyush Goel dated July 1, the association compared availability (in the form of government monthly quota) and the market price of sugar.

As per the letter, the market price of sugar was in the range of Rs 3,422-3,539 per quintal in July last year when the quota was 21 lakh tonnes. However, this year, the sugar price in July is in the range of Rs 3,624-3,743/quintal even as the quota for sales is 24 lakh tonnes.

It is to be noted that since 2018, the Centre re-introduced mill wise sales quota to ensure a balance between availability and ex-mill prices of sugar.

Under the quota system, the Centre releases mill-wise quota at the start of the month and any violation of the quota can lead the Government to invoke action against the mills.

Kuvadiya said data shows that the price rise started since May and sugar prices in the markets have increased steadily over the last two months.

“This is a clear violation of the laws of economics. When supply increases, prices should come down. But here in the markets, the prices are increasing even though the supply is robust. We are unable to understand the dynamics so the government should step in before the matter goes out of hand,” according to Kuvadiya.

The association’s demand comes even as vegetable prices, especially that of tomato, continue to make headlines.

Sugar, by far, is the only commodity which has withstood tail winds of inflation for the past few years, with retail price being more or less constant throughout the country between Rs 41 and Rs 45 per kg.

The association has expressed fears that sugar prices may increase in the second half of the year, which coincides with the festive season.

Meanwhile, the Maharashtra Cooperative Sugar Federation Limited has said the retail price of sugar should be in the range of Rs 3,750 per quintal to enable sugar mills to pay the new government declared Fair and Remunerative Price (FRP) of Rs 3,150/tonne of cane.

“Mills have been demanding a revision in the minimum selling price (MSP) of sugar. If the retail prices are high, it will allow the mills to ensure they pay their farmers on time for the cane purchased from them,” according to Sanjay Khatal, the managing director of the federation.