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The food inflation may be giving headache to the government, but sugar has been persistently witnessing a decline in prices for the past four months due to glut in the market. This may probably the reason why sugar mills are refusing to pay any higher prices to cane growers.
It should be remembered here that in the wholesale-price index sugar forms part of manufactured items and hence is not included in food inflation, which basically relates to primary (unprocessed) items. However, in consumer-price index, sugar forms part of food basket.
Sugar saw decline in prices since August this year in both WPI and CPI inflation rates. According to latest figures, WPI prices declined by 8.41% in November year-on-year, against 8.50% in the previous month. Also, sugar prices fell 5.82% in November against 5.46% a month earlier.
In retail markets, sugar prices came down to Rs 35.42 a kg against Rs 35.7 a month earlier and Rs 36.39 in June. In wholesale markets, sugar rates fell to Rs 32.88 a kg in November from Rs 33.29 in the previous month and Rs 34.01 in June, according to prices monitored by Consumer Affairs Department in select centres of the country.
The glut in sugar had earlier saw a stalemate between cane growers and mills on the price to be offered to the farmers. Ultimately, the deal was struck at Rs 280 a quintal, the same as last year.
The government gave sugar mills a number of sops including interest free loans of Rs 7,200 crore to help them face the financial crunch.
