The Prime Minister’s Office (PMO) has asked for a report from the state Sugar Commissioner’s office about mills selling sugar below the minimum selling price (MSP) of Rs 2,900 per quintal, after a complaint on the issue was filed by Swabhimani Paksh MP Raju Shetti earlier this month.
Across the state, mills have been struggling to recover even their production costs — pegged at Rs 3,400 per quintal — as sugar prices have dropped over the last 12 months. In April-May last year, sugar prices had fallen to Rs 2,400-2,500, upsetting the financial equations of millers.
After repeated requests of help from industry stakeholders, the central government had taken a slew of steps to address the issue. Fixing the minimum selling price of sugar at Rs 2,900 per quintal in June 2018 was one of the major steps taken by the Centre.
This step helped stop the freefall in ex-mill sugar prices and helped mills raise the requisite funds from banks. Mills that fail to adhere to the MSP mandated by Centre will have to face penal action. However, in his complaint to the PMO, Shetti said many mills have violated this condition.
Speaking to The Indian Express, the farmer’s leader claimed mills that were in a poor financial condition had pledged their stock at rates below MSP, in order to raise some quick cash. “Such mills are not entertained by banks or other financial institutions. So, they pledge their sugar production a season in advance to major traders, who enter into contracts to get sugar at lower than mandated rates,” he said.
Shetti said mills that get involved in such “underselling” also pay a lower fair and remunerative price (FRP) to cane growers. “As per our information, 15-20 mills have entered into such contracts…,” he said, adding that such contracts were illegal, given the Centre’s directive on minimum MSP for sugar.
Traders who buy sugar at lower rates can then go on to sell it at lower rates in retail markets. “The present glut in the market is because of such sugar being readily available,” said Shetti.
Sugar Commissioner Shekar Gaikwad said orders have been issued to the regional joint directors to submit a detailed report of sugar sales and rates in the next three to four days.