Government considering stock limit on sugar, decision likely next week

The Centre is considering imposing a stockholding limit on sugar wholesalers, prescribing the maximum quantity they can keep at any point of time in order to check any price rise. The last stock limit was imposed in 2016 amid a drought.

The Food Secretary is believed to have conveyed to sugar mills the government’s displeasure at the recent price rise after a spurt in ex-mill prices, sources said. However, the mills have suggested a higher domestic quota.

“There are several options available before the government, including prescribing that each mill sell a certain quantity every week and file a return to the government. Besides, there could also be a maximum selling price fixed for sugar mills, on the lines of the minimum selling price. However, these are exceptional control measures, which the government does not want to take,” a source said.

The Food Ministry is closely watching the ex-factory price of sugar and a decision on the stock limit could be taken after a week based on the price trend, the sources said, adding it may be imposed until November 30, as supplies would normalise from December, with the commencement of the new crushing season in October.

Also read: Sugar: Maharashtra govt estimates less production for the second consecutive year

Under stock limits imposed in May 2016, traders were not allowed to hold sugar stocks of more than 10,000 quintals in Kolkata, the largest trading centre of the sweetener, and 5,000 quintals in other parts of the country. States were also given the option to reduce the limit and ensure stocks at the trader’s point was maintained within limits in 30 days from the date of receiving the sugar.

Also read: Indian government unlikely to allow sugar exports till March 2024 

According to Consumer Affairs Ministry data, the all-India average retail price of sugar has increased from Rs 42.38/kg in May to Rs 43.25/kg now. Official sources said though retail rates do not yet reflect the rise, there has been a spurt in ex-mill prices in the past 15-30 days. If traders expect prices to rise further during Dussehra and Diwali, the government would ensure stable rates as the country had adequate stocks.

The ex-mill price in Maharashtra has increased to Rs 3,630-3,670/quintal currently, from Rs 3,520/3550/quintal on August 1, officials said, adding a similar increase of about Rs 100/quintal has been observed in Uttar Pradesh, too, in a month.