The sugar industry is concerned about the release quota of 23.5 liters for September

Without asking for a review, the Indian Sugar Mills Association (ISMA) reported to the Ministry of Food the potential negative impact on millers of the high level of quotas released for domestic sales.

However, government officials said it was lower than the previous year’s level and sufficient for the festival’s demand.

In a letter to the Food Secretary, ISMA Chairman Aditya Jhunjhunwala said the average actual sales of sugar over the past few months were around 22 lakh tonnes (lt), while the government has fixed the quota at 23.5 lt. “The government had to extend the monthly sales quota schedule for July 2022 until August 31 due to the drop in estimated sales for the month,” he said in the letter.

The government has set the minimum sale price at which mills are required to sell and does not lower tariffs unnecessarily in a year of excess production to avoid the accumulation of sugar cane arrears. The Center has also reintroduced the allocation of a monthly quota of delivery orders per factory to be sold on the domestic market to control oversupply, which is again one of the factors for the accumulation of cane arrears.

But, a government official said that in September 2021 the quota was 24.5 litres, which is 1 liter more than the current allocation. As many festivals including Dussehra and Diwali will take place in October, the demand for sugar will increase this month, the official said.

However, the government has been sensitive to the concerns of the factories and has extended the sales period to allow them to exhaust the allocated quantity and if such a situation arises, it will review it at that time.

Jhunjhunwala said that due to the failure to meet the full quota for the month, the government has allowed the unsold quantity of the September 2021 quota to be sold until October 31, 2021. “Additionally, the monthly sales quota for September 2019 and 2020 were set at 19.5 liters and 22 liters, respectively, in line with the average monthly sugar sales during this period,” he said in the letter.

But industry sources said even 1 liter of extra allowance has depressed sentiments, with current ex-factory sugar prices hovering around ₹34-35 per kg in most states, which is lower than the corresponding period of last year.

Published on

September 02, 2022

Rachel J. Bradford