The government is considering removing limits on sugar stocks to prevent prices from falling after a bumper harvest.
Industry officials met with Food Ministry officials late last week to urge the government to remove stock limits. The rules now allow a reseller or trader in northern and northeastern India to store up to 1,000 tonnes of sugar and 500 tonnes elsewhere in the country.
The industry representative also called for the removal of the 20 percent export duty on sugar.
“Officials have assured us that they will take all measures to support the industry and prevent the accumulation of sugar cane arrears. We expect the government to remove the limits on sugar stocks early next month, ”said one person who attended the meeting.
Private factories in Uttar Pradesh sell distressed sugar to settle their arrears of cane to farmers. Maharashtra’s crushing plants have sold their new-season production at low prices to cover their daily expenses. The benchmark sugar variety M-30 fell more than 3 percent in November to now trade at Rs 3,694 per cwt at the Vashi Farm Commodity Market Committee wholesale market. This sugar price was last seen in June 2016.
A number of sugar factories in Maharashtra, particularly in the Solapur district, quoted a price of Rs 3,275 per quintal. Factories in western Maharashtra have pledged to pay sugar cane producers Rs 200 above the fair and remunerative price of Rs 255 per quintal and their cost of sugar production amounts to Rs 3,500 per quintal. . The Indian Sugar Mills Association (ISMA) estimates the average cost of sugar production during the 2017-18 season at Rs 3,300-3,350 per quintal. Sugar factories in western Maharashtra are suffering losses of up to Rs 75 per quintal. In Uttar Pradesh, cash market prices for sugar are Rs 3,700 to Rs 3,800 per quintal and ex-factory prices are around Rs 3,400 per quintal, slightly above the average cost of production.
“At this price, sugar factories in parts of Maharashtra will struggle to make any money due to their commitment to pay farmers more than the PRF advertised by the Center,” said Narendra Murkumbi, Managing Director of Shree Renuka. Sugars. The fall in sugar prices is normal at the start of the crushing season but the situation this year is worrying due to 4 million tonnes of carry-over stocks from the previous season and abundant production of 25.1 million tonnes for the current campaign. Total sugar availability in India is expected to be 25 percent in excess at 29.5 million tonnes against a projected annual consumption of 23.5 million tonnes.
Vijay Banka, full time director and CFO of Dwarikesh Sugar Industries, said: “Sugar prices will get some support with the removal of stock limits. “Right now the demand for sugar matches the supply.” There is no reason for its price to drop. Prices will stabilize at Rs 3,200 per quintal. Once wholesale consumers start buying with the removal of stock limits, sugar prices will pick up, probably around the end of January, ”said Sanjiv Babar, general manager of the Federation of State Sugar Cooperatives. of Maharashtra.