New Delhi, August 29: Ex-mill sugar prices have declined by around 20 per cent in recent days, with retail prices also beginning to move downward, the government said on Friday, assuring consumers of adequate availability of sugar across the country.
The government said it has taken a series of measures to prevent artificial tightening of supplies and ensure faster movement of sugar through the supply chain.
According to the government, the recent spike in sugar prices was primarily driven by hoarding and speculation rather than any actual shortage, as the country has adequate stocks.
A nationwide physical verification of sugar stocks at mills has reaffirmed the comfortable availability position. In several cases, mills were found to be holding stocks higher than those declared in their monthly returns submitted to the government.
The verification exercise established that there is no shortage of sugar in the country, the government said, adding that there was no justification for panic buying or excessive stocking.
In some cases, sugar mills were also found to be resorting to short selling, or selling less sugar than the quantity allocated to them under the monthly quota. The government said such practices can unnecessarily restrict market supplies despite adequate physical stocks.
Fortnightly quota system from September
To improve the timely movement of sugar, the government has decided to introduce a fortnightly sugar allocation system from September, replacing the existing monthly quota system.
Under the new system, mills will be required to sell at least 40 per cent of their allocation in the first week and the remaining quantity in the succeeding week.
The government said the fortnightly system will allow it to monitor demand and supply more closely, respond quickly to changes in market conditions, prevent artificial tightening of supplies and release additional quota whenever required.
Sugar to be dispatched within seven days
Sugar mills have also been directed to dispatch sugar within seven days of sale.
The government said the combination of fortnightly quota allocation and mandatory dispatch within seven days would improve the movement of sugar from mills to dealers and ultimately consumers, while discouraging unnecessary accumulation and speculative holding of stocks.
Bulk consumers have also been advised against accumulating sugar stocks beyond their operational requirements.
New sugar season to boost availability
The government said sugarcane crushing for the new season will commence from October 15, with more than 10 lakh tonnes (LMT) of sugar expected to be produced during October.
Sugar mills have been permitted to sell sugar produced during October without restriction so that new-season production reaches the domestic market at the earliest.
Sugar production is expected to reach around 45 LMT in November, providing substantial additional supplies for domestic consumption.
The government said operational mills in Karnataka and Maharashtra are also expected to add around 2 LMT of sugar during September.
The Centre said the combination of existing stocks, faster movement, early crushing and increased new-season production would further strengthen domestic availability.
It assured consumers that there is no shortage of sugar in the country and that all necessary measures would be taken to ensure adequate and continuous availability at reasonable prices, particularly during the forthcoming festive season.
