Government plans to re-introduce release order mechanism to check surging sugar prices

Food Secretary Vrinda Sarup reviewed the price situation today in a video conference interaction with both sugar producing and consuming states

In a throwback to the release order mechanism days, the central government is mulling whether to impose stock limits for sugar millers and restrictions on domestic sales by fixing a quota on each mill, to tame retail prices, currently Rs 43 a kg.

Food Secretary Vrinda Sarup reviewed the price situation here on Thursday in a video conference interaction with sugar producing and consuming states.

“Prices are rising because of tight supply, created mostly by holding of stocks by millers. We are looking at stock limits and to reintroduce the monthly release mechanism,” a senior ministry official told PTI after the meeting. At present, stock holding limits are in place on dealers/traders, not on millers.

Currently, there is a stock holding limit on a dealer or trader for up to 500 tonnes for all states, barring West Bengal. The limit for a dealer/trader in Kolkata and extended areas of Bengal is 1,000 tonnes.

Under the release order mechanism, the central government decided how much each mill would sell in the open market. This mechanism was scrapped in 2013, when the sugar industry was partially decontrolled.

To curb prices, the government recently imposed a 20 per cent export duty on sugar and withdrew the cane production subsidy to mills.

Sugar prices are rising as domestic production is estimated to decline to 23-23.5 million tonnes in the 2016-17 marketing year (October-September), as against 25.1 mt in the current year.

Earlier during the day, former agriculture minister Sharad Pawar said prices were expected to remain under pressure due to an estimated supply gap of 3.5-4 mt in 2016-17.