Two months before the official commencement of the 2017-18 crushing season, sugar mills in Maharashtra have to reckon with stock limits, which they say will be hard to meet. The stock limits, which were announced by the central government on Tuesday, are aimed at ensuring easy availability and lower prices of sugar during the upcoming festive season. Millers, on the other hand, say this move will not only be hard for them to execute, but might not drastically bring down the sugar rates.
Union Civil Supplies Minister Ram Vilas Paswan took to Twitter on Tuesday to announce the stock limits. Paswan specified that by the end of September 2017, mills should have just 21 per cent of the sugar stock they were holding at the start of the season of 2016-17 and by the end of October, mills should have just 8 per cent of their opening stock. This move, the minister said, will help in controlling sugar prices in September and October.
While Dussehra is in the month of September, Diwali is in October and the government aims to increase sugar availability during that period and also control the price. Mills have to increase their sales to meet the stock limit levels, failing which they could face action. At present, the retail price of sugar is at least Rs 45 per kg while ex-mill price of sugar in Maharashtra is Rs 37 per kg.
In Maharashtra, the consolidated sugar stock available with mills is at least 22.65 lakh tonnes. Many of the mills, especially in the cane belt of Western Maharashtra, have as much as 50-60 per cent of their stock. At the end of the crushing season of 2016-17, mills in the state had produced just 42 lakh tonnes of sugar, but most of the mills have large unsold volume of sugar from the previous two seasons, which had seen good production of sugar. The challenge before the mills is to now reduce their stock substantially. Maharashtra normally records sale of 5-6 lakh tonnes of sugar per month.
Due to the drought of the previous year, barring Uttar Pradesh most of the sugar producing states have reported lower production. At present, only mills in Uttar Pradesh and Maharashtra have effective sugar stock. Millers said the situation will be neck-to-neck as the supply will be just enough to meet the demand.
Sanjeev Babar, managing director of the Maharashtra State Cooperative Sugar Factories Federation, said it would be difficult for mills to liquidate their stock in such a short time. “This move, however, might not reduce prices in retail markets much,” he said.