Concerned over the low sale of sugar, the Indian Sugar Mills Association (ISMA) has asked for an extension of the December’s sale quota and a smaller quota in January. The move comes even as mills have started selling sugar below the government declared Minimum Selling Price (MSP) of Rs 3,100 per quintal.
Two months into the ongoing sugarcane crushing season, low sugar sales have stumped millers who are hard-pressed for funds to pay the fair and remunerative price (FRP) for cane purchased from farmers. The Indian Express had reported how many mills were forced to ‘undersell’ their sugar stock to raise funds to meet their expenses. Almost all mills in Solapur and half in Marathwada and Ahmednagar are now selling sugar below the base price of Rs 3,100 per quintal.
In a letter addressed to the joint secretary (food), ISMA director general Abinash Verma said sugar mills across the country have reported low sales in the last 10-15 days and thus will have a large portion of their December quota unsold. Because of the excess supply and less demand, ex-mill prices (the price at which mills sell their sugar stock) have fallen in the last few weeks. Sources in the sugar industry said that mills in Maharashtra have reported almost 50 per cent unsold stock, which has thrown them into financial distress.
“It is therefore requested that the monthly quota of December 2020, may be extended up to January 15, 2021. Also, it is requested that the January 2021 monthly sale quota may be reduced accordingly,” the letter read. Sugar millers point out that traditionally the months of December and January see low sugar sales as demand for soft drinks, ice cream and sweets tank. The industry has been complaining about the financial crunch as pending export dues for the 2019-20 season remain unpaid by the central government. The industry has claimed that around Rs 5,900 crore worth of subsidy for 5.7 million tonnes of sugar exported remains unpaid. The central government has announced that dues would be cleared in a week’s time.
Mills in Maharashtra are particularly hard hit with almost all mills in Solapur having resorted to underselling. Around half the mills in Ahmednagar and Marathwada have been selling sugar below the government notified Rs 3,100 per quintal. Most of the mills have complained about no response to their tenders for sugar sales at Rs 3,100.
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