The center is considering imposing inventory limits on sugar wholesalers, stipulating the maximum quantity they can keep at any point in time, to curb rising prices. The last stock limit was imposed during the 2016 drought.
The food minister is believed to have conveyed to the sugar mills the government’s dissatisfaction with the rise in prices following a recent spike in ex-factory prices, the sources said. However, mills have suggested increasing domestic quotas.
“The government has a number of options, including stipulating that each factory sell a certain amount each week and submit a statement to the government. In addition, on top of the minimum selling price, it can also set a maximum selling price for the sugar factories. However, these are special control measures that the government doesn’t want to take,” one source said.
The food ministry is closely monitoring sugar ex-factory prices and may make a stock limit decision in a week’s time based on price trends, the source said, adding that the new crushing season starts in October as supplies will start in December.
Under stockpiling restrictions imposed in May 2016, traders are limited to holding sugar stocks of no more than 10,000 quintals in Kolkata, the largest sweetener trading hub, and 5,000 quintals in other parts of the country. States can also choose to lower the limit and ensure that traders’ stocks remain within the limit for 30 days from the date the sugar is received.
According to data from the Ministry of Consumer Affairs, the average retail price of sugar across India has risen from Rs 42.38/kg in May to the current Rs 43.25/kg. Official sources say ex-factory prices have spiked in the past 15-30 days, although retail prices have not yet reflected the rise. If traders expect prices to rise further during the Tokachi and Diwali festivals, the government will ensure that prices are stable as the country has ample stocks.
Ex-factory prices in Maharashtra have now risen to Rs 3,630-3,670/quintal from Rs 3,520/3,550/quintal on August 1, the officials said, adding that a similar increase has been seen in Uttar Pradesh , about 100 rupees/quintal, in a month.
