Sugar mills in Maharashtra have a new worry: traders aren’t lfting their stocks. Both, a fall in prices and a cut in the ‘free-sale quota’ for the government’s public distribution system haven’t helped.
The free sale quota this month is 1.28 million tonnes, down from last year’s 1.4 mt at this time. And, ex-mill prices are Rs 2,450 a quintal, excluding duty, 250 a quintal below the mills’ cost of production.
Yet, “Traders, by and large, are keeping themselves away... their participation is negligible,” industry sources told Business Standard. “Those traders who have participated in the bidding and are awarded (the amounts) are not lifting the stock.” Millers say they are now looking for alternatives, such as listing on the spot exchanges like NCDEX, where they could sell sugar directly.
Yogesh Pande, founder-president of the sugar brokers association said the consumption last year was on the higher side, due to expectation of lower production. Due to this, there was huge demand and people were building up big stocks. However, this year, no one is keen to purchase sugar due to expectation of higher production.
A managing director of a cooperative mill from western Maharashtra, who did not want to be named, said the wholesaler was not getting positive signals from his stockists and retailers, So, he is not lifting stock. “The main reason is that Maharashtra’s traditional markets like West Bengal, Assam and the far east have already been captured by aggressive millers and traders from Uttar Pradesh, as well as new refineries which have come up in that area.”
Prakash Naiknavare, managing director of the Federation of Cooperative Sugar Factories in Maharashtra, said: “This issue was debated at a recent meeting, wherein cooperation minister Harshvardhan Patil asked the mills to go in for registering on the online spot exchanges to sell their sugar online, instead of depending on traders participating in tenders. Millers were told that this platform provides absolute transparency: the sugar is offered to a large number of buyers at the same time and the auction is locked-in online.”
A leading sugar cooperative from cane-rich western Maharashtra has already started selling its sugar on the NCDEX spot exchange and other cooperative mills would soon follow, he said.
