With a view to force sugar mills to sell on a regular basis and improve availability in the market, the government has reintroduced the weekly release mechanism for February, according to a government release. Prior to this, mills were following a fortnightly sale mechanism wherein the monthly allocation was to be sold in two equal installments.
The government has allocated 1.79 million tonnes of sugar for the open market sale in February. Mills have now been directed to sell 20 per cent of the allocation in the first week, 30 per cent in the second week and the remaining 50 per cent in equal installments during the third and fourth week.
Mills have been instructed to strictly comply with the new mechanism, failing which the unsold quantity would be converted into levy sugar and would be sold through the public distribution system (PDS). The realisation from levy sugar is just Rs 1,300-1,400 a quintal, way below the open market realisation of Rs 3,900-4,000 a quintal. Industry officials, however, expressed displeasure over the new norm. “Instead of making the industry free, the government is tightening controls. This serves no purpose and leads to unnecessary rise in prices,” said an industry official.
In April last year, the government had changed the monthly release mechanism to a weekly system to put pressure on mills to sell regularly in the market. The purpose was to ensure open market availability at a time when the country’s sugar output touched a three-year low and caused a sharp price rise.