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Wednesday, March 03, 2021

Sugar mills look forward to robust sales in February after two months of sluggish business

Low demand has caused distress sales below MSP.

Written by Partha Sarathi Biswas | Pune |
February 4, 2021 12:13:57 am
Industry sources, while speaking to The Indian Express, said on paper none of the mills would have shown selling sugar below MSP. (Representational)

Sugar millers in the country are hopeful that this month will witness robust sales after two back-to-back months of sluggish business. Faced with low demand, many mills in Maharashtra and Karnataka have reported distress sales of sugar below government-declared minimum selling price (MSP) of Rs 3,100 per quintal.

Prakash Naiknavare, director general of National Federation of Cooperative Sugar Factories, said mills across the country had failed to sell 30 per cent of the allocated sales quota.

He said sluggish sales had led to many mills facing financial constraints in way of paying the fair and remunerative price (FRP) for the cane purchased from farmers. Faced with the threat of action, many mills in the state have started selling sugar below MSP, he added.

Naiknavare also said what was mainly a phenomenon restricted to mills in Solapur, Ahmednagar and Marathwada regions of Maharashtra has since then spread to mills in Karnataka also.

Industry sources, while speaking to The Indian Express, said on paper none of the mills would have shown selling sugar below MSP. “However, subtle subterfuges like supplying more than the quantity signed up for, discount in way of not considering transportation costs are taken to ensure mills are able to sell their stock,” a trader said.

The trader also said the capital raised was used to clear FRP, and mills that did this were normally unable to raise enough capital from banks and other financial institutes.

This underselling comes even as the central government has announced a subsidy-based export programme for shipping out 60 lakh tonnes of sugar from the country. The Rs 3,500-crore programme aims to provide mills Rs 6 per kg of sugar exported. To date, around 22 lakh tonnes of contracts have been inked.

Sugar trader Praful Vitthlani, however, said problems related to availability of containers had put a spanner in the exports as of now.

Jaiprakash Dandegaonkar, chairman of the federation, has requested the government to increase the MSP of sugar to Rs 3,800 per quintal. He said this would allow millers to raise more working capital in way of a pledge loan.

“The worrisome spectacle of mills selling sugar below MSP stems from the dire need of capital. If another source of funding is raised, then this will stop,” he added. Former agriculture minister Sharad Pawar, it is learnt, will soon take up the matter with the Prime Minister’s office.

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