Millers defy sugar federation, sell below benchmark

Mills have defied the Sugar Federation directive asking them not to sell the sweetener below the Rs 2,700 per quintal benchmark price.

According to sources, mills have reportedly sold white sugar at Rs 2,450-2500 per quintal to raise working capital and pay salaries.

On July 23, the Maharashtra State Federation of Co-operative Sugar Factories (Sugar Federation) had issued a statement – following a first-of-its-kind meeting with representatives of sugar federations in Gujarat, Karnataka, Tamil Nadu, Andhra Pradesh and Uttar Pradesh – that the nearly 500 members should restrain from selling sugar below the benchmark price.

“Mills have different priorities. A majority of them lowered prices due to levy fears while others did not want high inventory level,” said a senior official with the Indian Sugar Mills Association.

According to existing norms, the residual quantity from monthly quota release automatically turns into levy quota that fetches mills Rs 13 per kg, almost 50 per cent lower than the current prevailing price in the spot market.

“Given the vagaries in the nature of sugar mills, how do you expect them to adhere to directives of the federation amid uncertainty of policy decisions? Since, the government continues to control the sugar industry, anti-industry policies can hammer you anytime. Hence, the benchmark price can not prevail in this industry,” the official added.

Prakash Naiknavare, managing director of the Sugar Federation, however, had ruled out any attempt to make a syndicate. “This was just an appeal,” he had said. Finding the benchmark price significantly higher than the prevailing price in spot markets, bulk consumers and stockists abstained from fresh booking. As a consequence, stockpiling continued through the week beginning July 24. Now, the excessive quota is being released by mills as the government did not allow any time extension.

“We had requested the food ministry to extend the release period by a week. But, the ministry did not taken a final decision in this regard. This means, the monthly period will remain intact,” said Vinay Kumar, managing director of National Federation of Cooperatives Sugar Factories.