Maharashtra mills asked not to sell sugar below levy rates

Mills in Maharashtra have been directed not to sell any sugar below the levy prices. This is aimed at tiding over the crisis of low realisations on sugar and the mills' inability to pay the second sugarcane instalment to farmers.

That no sugar mill in the state would sell sugar below the levy sugar price was decided in a meeting in Pune on February 27. Concerns were expressed over the falling sugar prices and the mills' failure to make cane payments to farmers in the meeting, convened by the Maharashtra sugarcane commissioner at the request of the Maharashtra State Co-operative Sugar Federation (MSCSF). "The move will arrest the falling sugar prices in Maharashtra that accounts for nearly one-third of the country's sugar," said Ajit Chowgule, secretary, MSCSF.

Sugar prices in the state dropped to Rs 1,285-1,290 a quintal, significantly below the Rs 1,338 a quintal that mills are realising on the levy sugar (10 per cent of their produce that they supply to the government for its public distribution system requirements).

To ensure that the neighbouring sugar producing states do not sell sugar below their respective levy prices, the decision will also be communicated to the sugarcane commissioners of Tamil Nadu, Gujarat, Karnataka and Andhra Pradesh, according to Chowgule.

It was also decided that mills should not enter into contracts to export sugar below Rs 1,300 a quintal. While Maharashtra mills paid the first instalment of Rs 900 a tonne to farmers, the payment towards the second instalment of Rs 380 has not yet been made as the mills have been facing lower realisations on their sales.

The food ministry has proposed a sugar buffer of 20 lakh tonne to provide some relief to the domestic industry, which is expecting a crisis because of production glut.

The country is likely to produce record sugar at 230 lakh tonne against a consumption requirement of 185 lakh tonne. Last season, the total production was 191 lakh tonne.