India’s ex-mill sugar prices fall 20 per cent, retail prices expected to ease

India's ex-mill sugar prices have fallen around 20 per cent amid adequate stocks, with retail prices also beginning to ease, the Consumer Affairs Ministry said. From September, fortnightly quotas and mandatory dispatch within seven days will improve supply movement and curb hoarding

New Delhi: Ex-mill sugar prices in India have declined by around 20 per cent, while retail sugar prices have also started coming down, and given the normal transmission of changes through the supply chain, retail prices are expected to follow the downward movement in prices shortly, the Ministry of Consumer Affairs, Food & Public Distribution said on Friday.

The government has been closely monitoring sugar prices, stocks and movement across the country and has taken a series of proactive measures to ensure that the benefit of adequate availability reaches consumers. The downward trend in ex-mill and retail prices reflects that the sharp spike in prices witnessed recently was primarily on account of hoarding and speculation, although the country carries adequate stocks of sugar, the ministry statement said.

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A nationwide drive for physical verification of sugar stocks at mills has reaffirmed the comfortable availability position. In several cases, sugar mills were found to be holding stocks higher than those declared in their monthly returns submitted to the government. The verification exercise has established that there is no shortage of sugar in the country and there is no justification for panic buying or excessive stocking, it said.

In some cases, sugar mills were also found to be resorting to “short selling”, which means selling less sugar than the quantity allocated to them under the monthly quota. Such practices tend to unnecessarily constrain market supplies despite adequate physical stocks, the statement said.

The government has also observed that, in certain cases, sugar sold by mills at the beginning of the month was being dispatched or lifted by buyers only towards the end of the month. This practice contributed to artificial scarcity in the market.

To address such issues and ensure that sugar reaches the market in a timely manner, the government has decided to introduce a fortnightly sugar allocation system from September, replacing the existing monthly quota system. Under the fortnightly quota, mills will be required to sell at least 40 per cent of the allocation in the first week and the remaining quantity in the succeeding week.

Sugar mills have already been directed to ensure that sugar sold is dispatched from the mill within seven days of sale. The combination of fortnightly quota allocation and mandatory dispatch within seven days will significantly improve the movement of sugar through the supply chain. It will ensure that sugar moves quickly from mills to dealers and ultimately to consumers, while discouraging unnecessary accumulation and speculative holding of stocks. Bulk consumers of sugar have also been advised not to accumulate stocks in excess of their operational requirements.

Sugarcane crushing for the new season will also commence from October 15, and it is expected that more than 10 LMT of sugar will be produced during the month. The government has also permitted sugar mills to sell sugar produced during October without restriction, ensuring that new-season production becomes available in the domestic market at the earliest. Sugar production is expected to be around 45 LMT in November, providing substantial additional supplies for domestic consumption, the statement added.