Govt imposes stock limits on sugar mills

Move aims to keep prices under control during the coming festive season

The Union food ministry has imposed stock limits on sugar mills for the next two months, in a bid to keep sugar prices under control during the festive season.

While making the announcement on Twitter, Food Minister Ram Vilas Pawan added there was “no shortage of sugar for domestic consumption in the country”.

According to a notification issued by the ministry on Tuesday, the stock limit for September 2017 is 21 per cent of total sugar available with sugar mills during the 2016-17 sugar season. For October, it’s eight per cent of total sugar available with the mills during the 2016-17 sugar season.

The notification also said the government had asked all states and Union Territories to take steps to ensure enforcement of the stock limits on mills.

A leading industry official said the move would put pressure on the mills that were holding higher stock.

There is a stock limit of 500 tonnes on sugar traders. As the festive season has already begun and sugar demand is expected to rise, the government has resorted to imposing stock limits, instead of permitting south Indian sugar mills to import more.

South India is facing sugar shortage, and prices are higher in the region.

Total availability of sugar in the ongoing sugar season — October 2016-September 2017 — is estimated at 28.5 million tonnes (mt), including 7.7 mt opening stock, 20.3 mt production and 5 lakh tonnes imports, according to the estimates of the Indian Sugar Mills Association (ISMA).

The current stock with the mills is around 6 mt. “By September-end, it is expected to be around 3.8-3.9 mt. During October, when Diwali will fall, mills could sell 2.4-2.5 mt, leaving a stock of 1.4 mt at the end of the month,” a trade representative said. He added that stock limits were in line with demand expectations.

ISMA has estimated the next season output to be 25.1 mt. Abinash Verma, director general, ISMA, said, “There can be around 150 out of 530 sugar mills which might be under pressure to sell more in the next couple of months. This decision will ensure that the sugar prices remain comfortable for consumers and yet not adversely impact the realisations of sugar producers. The stock holding limit will hopefully ensure sufficient supplies in the festival season and also leave a reasonable balance before the new sugar from the next sugar season comes into the market.”

The move to impose stock limits came after the mills from south India asked for import permission to fill the gap in supplies. However, imports would have destabilised the market for the next year as the sugarcane and sugar output was estimated much higher.

The sugarcane crushing season is expected to begin first in Maharashtra by the second week of October, followed by north Karnataka. “Some mills in UP are starting crushing in mid- October, though most will start after Diwali,” an official said.