In anticipation of the upcoming festive season, the government has expressed apprehension over a 5-6% increase in ex-factory sugar prices observed in the last two to three months. This rise is attributed to a reduction in the sugar surplus caused by increased exports and a decline in production. In response to the situation, the government has issued stringent directives to state governments to meticulously gather precise data concerning sugar stocks from all sugar factories by the end of July, as informed by reliable sources.
According to high-level sources, the central government has initiated a verification process for the goods and services tax (GST) paid by sugar mills as part of their efforts to ascertain the stock positions in the country. There are suspicions that certain sugar stocks might have been sold unofficially to destinations that are not permitted. Therefore, authorities are diligently examining the GST data to ensure transparency and legality in the sugar trade.
In light of the recent increase in tomato prices and the rising cost of onions, the government is implementing measures to prevent excessive escalation in sugar prices, particularly as the festive season approaches.
“We are not anticipating any rise in prices in sugar, edible oils, rice or wheat” in the upcoming festival season, food secretary Sanjeev Chopra said, PTI reported Friday. “Prices will rule in a stable manner.”
Maharashtra sugar commissioner Chandrakant Pulkundwar said, “Our officials will sign the stock declaration by sugar mills only after they physically verify the stocks at the sugar mill premises.”
While there is no scarcity of sugar in the country, the surplus available has noticeably diminished. During the 2021-22 period, India achieved a remarkable sugar production of 35.9 million tonnes, and an all-time high export of 11 million tonnes. However, in the ongoing 2022-23 sugar marketing season, which concludes in September, India’s sugar output has experienced an 8.6% decline compared to the previous year, reaching 32.8 million tonnes. Additionally, the country has exported 6 million tonnes of sugar this year, further contributing to the reduction in surplus.
As the festival season approaches, industry representatives have reported a strong demand for sugar in the market.
“It is suspected that a large number of sugar mills have sold more sugar than their monthly quota during the period when they were crushing the sugarcane, which has reduced the arrival of sugar in the market,” said a broker, who didn’t want to be identified.
The Indian Sugar Mills Association (ISMA) has projected a 3.3% decrease in sugar production for the upcoming 2023-24 season, commencing in October. According to ISMA’s estimations, net sugar production is expected to be 31.7 million tonnes, down from the previous year’s estimate of 32.8 million tonnes. Consequently, there will be a carry-forward stock of 4.2 million tonnes, which falls short of the two-month requirement. ISMA’s assessment indicates that India’s annual sugar consumption stands at 27.5 million tonnes, equivalent to 2.3 million tonnes per month.
According to a prominent industry executive, sugar factories are experiencing a significant deficit of 35-40% in payments to farmers during the crushing season. To meet their obligations, these factories secure loans from banks, using the sugar as collateral to compensate cane farmers. The banks determine the value of the sugar based on the minimum sale price (MSP) set by the central government, which has been fixed at INR 31 per kilogram since 2018-19.
However, the sugar industry sought to reassure consumers.