Ex-mill sugar prices across India have seen a significant drop of approximately 20% in recent days. This decline comes as the government intensifies its efforts to combat hoarding and speculation, which it identified as the primary drivers behind a recent surge in prices, rather than an actual shortage.
Government Implements Fortnightly Quota System
To ensure consistent supply and prevent artificial scarcity, the existing monthly sugar quota system will be replaced by a new fortnightly allocation system starting in September. Under this revised framework, sugar mills will be mandated to sell a minimum of 40% of their allocated quota within the first week, with the remaining quantity to be sold in the subsequent week. This measure is designed to allow for closer monitoring of demand and supply dynamics and enable quicker government intervention, including the release of additional quotas if necessary.
Strict Dispatch Directives and Stock Verification
The government has also issued a directive requiring sugar mills to dispatch sold sugar within seven days of the sale. This aims to accelerate the movement of sugar from production facilities to dealers and, ultimately, to consumers. Investigations into sugar stocks at mills revealed adequate supplies, with some holding more than initially declared. Bulk consumers have been advised against accumulating stocks beyond their immediate operational needs.
New Sugar Season Expected to Boost Supplies
The supply situation is anticipated to strengthen further with the commencement of the new sugar season. Sugarcane crushing is scheduled to begin on October 15, with projections of over 10 lakh tonnes (LMT) of sugar production in October and approximately 45 LMT in November. Mills will be permitted to sell sugar produced during October without restriction, ensuring a swift entry of new-season output into the domestic market.
Furthermore, early production from operational mills in Karnataka and Maharashtra is expected to contribute around 2 LMT during September, adding to the immediate supply. While ex-mill prices have already seen a substantial reduction, the government expects retail prices to follow this downward trend as the effects propagate through the supply chain, assuring consumers of adequate supplies at reasonable prices, especially ahead of the festive season.