Alarmed over sugar mills intentionally selling sugar below the government specified Minimum Selling Price (MSP) of Rs 3,100/- per quintal, the central government has warned of stringent action against errant mills. In a letter to cane commissioner of the major sugar producing states, Jitendra Juyal, joint director, ministry of consumer affairs, food and public distribution has asked for names of such mills to be intimated to the central government for further action.
Four months into the sugar season of 2020-21, sugar mills in Maharashtra and Karnataka had started selling sugar below the MSP. This was mostly to generate quick funds to clear their dues in way of payment of the Fair and Remunerative Price (FRP) for cane procured from farmers as well as other running cost. This phenomenon of price cutting was rampant in Solapur where almost all the mills were indulged in the same, Marathwada and Ahmednagar where half of the mills were doing so.
Back in 2018, the central government had fixed the MSP of sugar at Rs 3,100/- to prevent millers from selling the same at costs far below the cost of production. This move was needed to stabilize the market in a year when excess sugar production had seen millers selling the sweetener at prices as low as Rs 2,500-2,600.Along with the MSP, the mils were given fixed monthly quota for sale to keep sugar from flooding the markets.
In his letter to the sugar mills the joint director pointed how how both the measures were introduced to prevent cash loss to sugar mills and maintain the demand supply balance in domestic market.
“The limit of sales/dispatch of all sugar mills are determined based on a very well defined and uniform criteria based on stock held by the sugar mills along with incentive given on diversion of sugar to ethanol and on account of export. Objective of imposing the stock holding limit on sugar mills is to ensure that a level playing field is provided to all sugar mills. Further, stock limit on sugar mills are being imposed in such a manner that release of sugar from the mills are restricted to the extent of consumption requirement of the country so that the sugar price remains stable at a reasonable level.,” the letter read.
Blow MSP sales, he pointed out, would dislodge the entire steps take by the Government for the survival of sugar industry and may result in accumulation of cane price arrears of farmers. Millers, who defy the same, the officer said, will face action under the Essential Commodities Act, 1955. Cane commissioners have been asked to issue necessary instructions to the field officers in the state to minitor the sale of sugar by mills in the domestic markets and to ensure that the sugar mills do not breach the MSP.
Welcoming the move, Bhairavnath B Thombare, president of West Indian Sugar Mills Association (WISMA) said under selling posed a great threat to the industry. “For quick gains many of the mills had tied with traders- this would have killed the industry,” he said.