NEW DELHI: The government has imposed stock limit on sugar mills for the next two months to keep prices in check during the festive season, Food Minister Ram Vilas Paswan said today.
Sugar is selling at an average price of Rs 42 per kg in the retail market, while branded sweetener is available at Rs 50/kg.
"We have imposed stock limit on sugar mills for September and October to keep prices under control," Paswan tweeted.
By the end of next month, a mill cannot keep more than 21 per cent of its total sugar availability for the entire 201617 marketing year and a factory cannot hold more than 8 per cent at the end of October, according to a government notification issued today.
Total availability of sugar of a mill would be opening stock as on October 1, 2016 plus production during the 2016-17 sugar season (October-September) plus any import and minus sugar exported during the season.
Sugar production in India, the world's second largest producer, is estimated to decline to around 21 million tonnes (MT) in 2016-17 season ending September from 25 MT in the previous year. The annual demand is 24-25 MT.
The stock limits have been imposed to prevent artificial hoarding of sugar by mills during the festive season.
While cooperative sugar mills industry body NFCSF said there was no need to impose stock limits as current ex-mill prices are not alarming, private millers association ISMA welcomed the decision saying the move will check price rise during the festival season.
It said that only 150 mills out of 530 would have to sell more during the next two months.
"The average ex-mill sugar realisation at an all-India basis is not alarmingly high to call for imposing stock limits on sugar mills. Stock limits on traders are already in place.
Retail price will not go beyond Rs 44 per kg as mills are selling at a reasonable realisation," NFCFS MD Prakash Naiknavare told PTI.
He further said the stock limit will bring down the mills realisation and lead to financial stress on cooperative mills.
Meanwhile, the ISMA said, "Being a low production year, sugar mills have been generally selling reasonable quantity of sugar during the season."
Therefore, this decision will have an impact on some mills which were not selling at par with others, it said, adding that there could be around 150 out of 530 sugar mills which might be under pressure to sell more in the next two months.
This decision will ensure that the sugar prices remain comfortable for consumers without adversely impacting millers' realisation and farmers.
"The stock holding limit prescribed will hopefully ensure sufficient supplies in the festival season and also leave a reasonable balance before the new sugar from the next season," ISMA said.