Maharashtra claims advantage on sugar, post-decontrol

Price and availability are at Maharashtra's advantage

After the partial decontrol of sugar, sources in the trade here have claimed Maharashtra would be a favoured purchase destination for various state governments.

For, they say, the state enjoys the advantage of low price as compared to other producing states. Availability is another factor in Maharashtra’s favour.

The central government had decided to do away with the release mechanism (deciding how much a mill can sell in the open market) and the levy obligation (to sell a fixed percentage of output to it at below market price). The onus is now on the government of each state to procure their sugar requirement for the public distribution system (PDS) through the open market.

A Maharashtra state cooperation department official, who did not want to be identified, told Business Standard: “Despite drought, Maharashtra’s sugar production will be eight million tonnes (mt), with carryforward stock of 1.95 mt. Besides, the prevailing ex-mill price, excluding duty, is Rs 2,800-2,900 a quintal in Maharashtra, compared to Rs 2,800-2,850 a qtl in Karnataka, Rs 3,200-3,250 a qtl in Uttar Pradesh and Rs 2,900-3,000 a qtl in Gujarat.” He also contended the state’s sugar quality was superior.

An official at the Federation of Cooperative Sugar Factories said it had started receiving queries from various states and traders for possible purchase from factories. Yogesh Pande, president, Maharashtra Sugar Merchant & Brokers Association, noted the state contributed nearly a third of the country’s total production. Adding: “Maharashtra offers cheaper sugar compared to other states, though prices in Karnataka are almost similar. However, sugar production in Karnataka is low, compared to Maharashtra.” He said other states would start building stocks for the coming festival season.