In a letter to the Center, the sugar factories ask for a lower sales quota for September
In a surprise move, the Indian Sugar Mills Association (ISMA), the apex body for private sugar mills in the country, has written to the central government, asking for a review of the revised sales quota for the current month. The Association said the increase in sales quotas could lead to lower ex-factory prices for sugar.
In the letter, ISMA Chairman Aditya Jhunjhunwala protested against the 23.5 lakh ton sales quota granted for the month of September, pointing out that it is higher than the normal 22 lakh tons sales that factories see on an average monthly basis.
Even for July 2022, the monthly sales quota had to be extended until August 31 due to the drop in monthly sales.
Currently, sugar millets are commanding ex-factory prices of Rs 3,400-3,500/quintal, but uncertainty over next season’s export quota looms. The extra sales quota will have a detrimental effect on sugar prices, ISMA said in the letter. The current price of sugar is lower than last year, and due to a lack of clarity on exports, factories have been forced to sell sugar at a lower price. Factory owners have now demanded a reduction in the excess sales quota.
The 2021-22 sugar season for India had been exceptionally good with high production and record prices. The country had recorded robust exports of almost 100 lakh tons of sugar without any government incentives before the Center curbed exports.
With the 2022-23 sugar season due to start in October, the industry is hoping for another good season.
But the letter reveals that the fear of unsold inventory weighs heavily on the minds of factory owners.