Centre to allocate higher sales quota may sugar mills in May to tame prices

The Centre aims to allocate sugar mills a higher sales quota for May, which will cumulatively be 100,000-200,000 tonnes more than that in the same month a year ago, to tame prices of the sweetener, Union food and public distribution secretary Sanjeev Chopra said.

The government fears that rising prices at the mill level may lead to a spike in retail prices if not curbed immediately by releasing higher stocks of sugar.

Ex-mill sugar (small and medium-sized grade) prices in Uttar Pradesh, Maharashtra and Karnataka rose 2.6%-4.9%, depending on region and variety, to ₹3,540-3,930 a quintal in the past 30 days, according to spot traders.

The price rise is attributed to the crushing season drawing to a close. Only seven mills in Maharashtra, about 15 in Uttar Pradesh and some in Tamil Nadu are still crushing sugarcane. Crushing of sugarcane typically closes by the end of April.

Retail prices of the sweetener have remained stable in the range of ₹43-45 a kg for the past four months. As of Friday, all-India average retail sugar price ₹44.5 per kg, 5.4% higher on year, according to data from the consumer affairs ministry.

“Sugar mill prices have risen 3.5% in the last one month. We are now going to increase the sugar sales quota allotment for next month. We will allocate at least a lakh or two lakh (tonnes) more this year for May. Though retail prices have not started rising, before they reflect, we need to curb it,” Chopra told Mint.

The government allocated 2.4 million tonnes of sales quota to sugar mills last May. It allocates a monthly sales quota for each sugar mill after calculating domestic consumption, which is about 2.25-2.3 million tonnes a month on average. The quota for February was 2.2 million tonnes, which was increased to 2.35 million tonnes for March, and further to 2.5 million tonnes for April in view of higher demand during Ramadan and Eid.

“Mill prices have been going up for a few days as the crushing season is over. Price variation is more noticed in Maharashtra than Uttar Pradesh. Our focus is on retail price...retail prices rise after a fortnight of mill prices going up. April is about to end. We are waiting and watching. If we see a curb in price rise in the remaining 3-4 days, we will give a regular quota. If there’s a hint of a further price rise, we will increase the sales quota,” another senior official in the food ministry said on condition of anonymity. “When we have the stock, the rate must not go up. We must not let traders who are in between millers and public gain profit.”

“Last month’s quota was 2.5 million tonnes. A higher quota was given keeping higher demand due to Eid in mind. Next month’s quota will be compared with last May. We will consider the quota given last May. It has no connection with the April quota. There is no festival as such in May,” the official added.

The government increases the sales quota for sugar mills in months when there are festivals to ensure that sugar price remains in check.