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Sugar Prices Fall As Govt Orders Weekly Sale, Dispatch


By akansha, Section News
Posted on Wed Feb 03, 2010 at 11:22:35 PM EST


The step is aimed at preventing hoarding by sugar factories

Concerned by the rising sugar prices, the Union government has issued directives to sugar factories to sell and dispatch specific quantities of non-levy sugar on a weekly basis, instead of the existing practice of selling sugar released by the government on a fortnightly basis in two instalments.

This step is aimed at preventing hoarding of sugar by sugar factories, which creates an artificial shortage in the market and pushes up the prices.

The step resulted in sugar prices falling in the Pune market on Wednesday, with wholesale prices going down to Rs 3,500 to Rs 3,600 per quintal, as against Rs 3,950 to Rs 4,000 per quintal registered on Tuesday, said Vijay Gujarathi, president of Pune sugar traders association.

Gujarathi said retail prices have come down from Rs 43 to Rs 40 per kg. "However, it will take another three to four days before prices go down further to Rs 36 to Rs 37 per kg, following the new initiative taken by the Union government."

The Union government has made available 17.91 lakh tonne of sugar (15.97 lakh tonne non-levy sugar + 1.94 lakh tonne levy sugar) for February.

A statement issued by the ministry of consumer affairs, food and public distribution on Tuesday said the government has now decided that sugar factories shall sell and dispatch non-levy quota released for February on weekly basis in four instalments.

Source: Times Of India Sugar prices fall as govt orders weekly sale, dispatch

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As per the directive 20 per cent of the released quota has to be sold and dispatched during February 1 to 7, 30 per cent quota to be released and sold during February 8 to 14 and 25 per cent each has to be sold during February 15 to 21 and February 22 to 28.

"The sugar mills have been further directed to report actual sale and dispatch of sugar, for each week, which should reach the directorate of sugar within seven days of the end of the respective weeks. Any quantity which remains unsold/undespatched in a week would stand converted into levy stock. Any sugar mill which fails to report the weekly quota of sale and dispatch of non-levy sugar within the prescribed time, will be deemed to have actually not sold and delivered the quantity as stipulated," the statement said.

Meanwhile, Gujarathi said in view of the sugar crisis, the Union government must continue with the practice of selling and dispatching sugar quota on a weekly basis. "If the new restrictions remains only for February, sugar prices will again go up in March," he said.

Echoing similar views, Maharashtra Pradesh Congress Committee spokesperson Kanhaiyalal Gidwani demanded that the new restriction of weekly sale and dispatch of sugar must be in place for the next three years, considering that the gap in demand and supply would continue.

"I am disappointed that the government order mentions these restrictions only for February, and hope that the government will continue them further. Past experience shows that sugar factories and traders never faced any action as per law, when they did not sell the prescribed sugar quota during the month. Instead they always got an extension for liquidating the old stock," he said, while speaking to the TOI.

Gidwani said if the restrictions remain in force only for February, traders will buy sugar at cheap rates, when prices fall, and sell it at a much higher price when the restrictions are lifted next month. "In such a scenario, neither the factories nor the consumers or the farmers will benefit," he pointed out.

He said if the restrictions were not continued, the initiative will get reduced to a mere eyewash to temporarily appease consumers. "It will be like the government misusing its power to aid the nexus between traders and sugar factories."

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