Centre extends validity period for non-levy sugar quota

The sugar industry received much needed respite on Thursday with the Centre announcing a seven-day roll over relief period for quantity that remains unsold at the end of the stipulated weekly time period.

The revised roll over order has extended the validity period for the sale and delivery/ despatch of non levy sugar only for the last week of February. Though this order is for stocks till March 31, the industry expects it to further extended till April 30. This has led to correction in sugar prices.

With ex-mill prices improving by Rs 2 to 3 a kg and the stock moving into the market, the retail price has stabilised. In Maharashtra, where traders started participating in fresh tenders, the price is Rs 3,100 a quintal ex mill without duty for S 30 and Rs 3,550 a qunital at the consumer level.

According to the order, the validity period for sale and delivery/dispatch of non-levy sugar has been extended on a weekly basis for the weeks ending March 7, 15, 22 and 31, by one week to March 15, 22, 31 and April 7 respectively.

Industry sources told Business Standard that the weekly imposition on levy-free quota, that was introduced by the Centre on February 3, had brought the sugar prices down by almost Rs 10 a kg. “This caused wide spread panic among millers and traders. In fact, traders in Maharashtra withdrew their participation in sugar tenders which had literally brought sugar sale to a standstill in the state. However, following an agreement between the Federation of Cooperative Sugar Factories in Maharashtra and the Maharashtra State Sugar Merchants and Brokers Association, traders have resumed their participation.”

Sources said unavailability of sugar had resulted in a dip in sale prices to Rs 2,700 per quintal. "Had this order not come, the unsold stock would have got converted into levy that is priced at almost one third of the realisation price. This would have lead to a crisis in the mills.".

Yogesh Pande, founder chairman of the Maharashtra State Sugar Merchants and Brokers Association welcomed the Centre’s decision.

"This will ensure sugar prices to stabilize at around Rs 3,100 per quintal at ex-mill. We also demand that the Centre should clarify the comfort price of sugar for open market sale. This was necessary as the prices have crashed by 25 per cent and panic had set in among the millers and traders." He suggested that the Centre should declare minimum price for sugar on the lines of statutory minimum price of sugarcane.