The Government has introduced tighter monitoring and a new supply mechanism for sugar mills to ensure steady availability in the domestic market and prevent artificial shortages, following a recent period of sharp price increases.
Ex-mill sugar prices have declined by around 20 per cent in recent days, while retail prices have also begun to soften. The Government expects the decline at the mill level to gradually reflect in consumer prices as lower rates move through the supply chain.
According to the Government, there is adequate sugar stock in the country and the earlier price surge was largely linked to hoarding, speculative activity and disruptions in the movement of available supplies rather than an actual shortage.
A nationwide physical verification of stocks at sugar mills found that some mills were holding quantities higher than those declared in their monthly returns. The exercise also identified cases of short selling, where mills sold less sugar than their allocated monthly quota.
Delayed dispatches were another concern. In some instances, sugar sold by mills at the beginning of a month was not being lifted or dispatched until towards the end of the month, restricting supplies reaching the market and potentially contributing to temporary price pressures.
To address these issues, the Government has decided to replace the existing monthly sugar quota system with a fortnightly allocation mechanism from September. Mills will be required to sell at least 40 per cent of their allocated quantity during the first week and the remaining quantity in the succeeding week.
The new mechanism is expected to ensure a more regular flow of sugar into the market while allowing the Government to monitor demand and supply more closely and release additional quantities when required.
Sugar mills have also been directed to dispatch sold sugar from their premises within seven days. Bulk consumers, meanwhile, have been advised against accumulating stocks beyond their operational requirements.
Supply conditions are expected to improve further with the start of sugarcane crushing for the new season from October 15. More than 10 lakh tonnes of sugar is expected to be produced during October, and mills have been permitted to sell their October production without restriction.
Production is projected to rise significantly in November, when around 45 lakh tonnes of sugar is expected to be produced.
With new-season supplies approaching and stricter controls on stock movement and dispatches, the Government expects sugar availability to remain comfortable during the coming months, including the festive season.