Mills Dumping Sugar as Output Surges

(The Tribune) – A surge in sugar production when global prices are softening is causing problems of storage for mills across the country.

According to information available from Maharashtra’s Directorate of Sugar, production is expected to cross 40 million tonnes even as domestic demand is expected to remain at last year’s levels of 26 million tonnes. “India is sitting on a stockpile of 44 million tonnes of sugar accumulated from the past few years,” says an official from
Indian Sugar Mills Association.

On the other hand, the Indian government has brought in a Minimum Selling Price regime for sugar, which has prevented market forces bringing down the prices of the sweetener. Earlier this year the government increased the minimum selling price for sugar to Rs 31 per kg from Rs 29 ostensibly to ensure that the sugar mills do not go into losses. However, with not enough demand for the stocks already in their possession, sugar mills are looking at a number of methods to curtail production.

“Sugar mills are closing the crushing season early because of which farmers are stuck with unsold stocks of cane,” farm leader Raju Shetti of the Swambhimani Shetkari Sanghatana said recently.

Shetti agreed to a major demand by the mills that farmers take part of their payments in stock since the co-operatives which control the sector in Maharashtra claimed they did not have the funds to pay. On Thursday, the Union Cabinet unveiled a Rs 10,540 cr package for sugar mills to ensure that had enough funds to pay the farmers.

However, arrears owed by sugar mills to farmers across the country has exceeded Rs 20,000 crore already, according to sources.

Meanwhile reports are coming in about sugar mills in Maharashtra secretly undercutting each other to dispose off their stocks in the market. Big retailers and confectionary manufacturers in the state have quietly got sugar mills to bear the cost of transporting the sweetener to their warehouses apart from longer credit period, according to analysts.

Customers, on the other hand, are getting sugar free of charge on the purchase of their groceries in bulk.