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Govt keeps tab on sugar sales to curb price rise

The food ministry on Wednesday warned mills against attempts to hoard sugar during the festive season and asked them to sell the entire allocated quantity of four million tonne for October and November on time.

The food ministry on Wednesday warned mills against attempts to hoard sugar during the festive season and asked them to sell the entire allocated quantity of four million tonne for October and November on time.

If the mills fail to offload the allocated quantity during the period, the unsold sugar may have to be offered to the government at subsidised rates for its welfare programmes.

Sugar prices in India, the world’s top consumer, started creeping up, mainly from June, on fears that poor rains would drag cane yield down. Wholesale prices have since risen by around 15%, although good rainfall since August somewhat allayed apprehension of a drastic fall in sugar output and prevented any sharp upward spiral in the prices of the sweetener.

Currently, the government decides the quantum of sugar mills can sell in the market ? known as non-levy quota? each quarter or as notified by the food ministry from time to time, aimed at stemming hoarding and keeping supplies steady. Mills are also mandated to sell 10% of their output to the government for supplies through the public distribution system?called the levy sugar quota?at prices that cover just around 65% of their cost of production, according to an industry estimate.

However, unsold quantity of the non-levy quota within the stipulated period also gets converted into levy quota in which mills have to supply at cheaper rates to the government, although the food ministry has periodically allowed the mills to offload the unsold amount beyond the time specified.

The levy sugar price is fixed at R19 a kilogram, compared with the current mill gate rate of R35.

“An impression has been created by some circles that the non-levy quota of 4 million tonnes for sale in the open market during the months of October and November would get extended suo motu…. The sugar mills are advised to not to act on presumptions and are forewarned that any action on part of sugar mills to curtail the sale, delivery/dispatch of non-levy sugar released for sale in the market during the months of October and November,” the ministry said in a statement.

The ministry said it is closely monitoring the quantity of sugar being sold in the market, “and any action on the part of the sugar mills which is contrary to the spirit of the release order would be dealt with swiftly and strongly.”

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First published on: 18-10-2012 at 00:56 IST
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