Government tightens sugar stock limit for dealers to 1,000 quintals ahead of festive season

The government on Thursday further tightened the stock holding limit for sugar dealers to 1,000 quintals, effective from October 15 to November 30, in a bid to ensure adequate supplies of the sweetener at reasonable prices during the festival season.

Dealers will be allowed to hold stock for only 15 days. The amended norms will not apply to Kolkata and its extended metropolitan areas, and Assam, the food ministry said in a statement.

New sugar stock limits from October 15

With the new sugar season beginning October 1, the Centre said it was strengthening measures to ensure availability of sugar to consumers at reasonable prices during the festive period.

"By restricting the quantity and storage period of sugar, the government aims to facilitate the orderly movement of sugar through the supply chain and ensure its continuous availability to consumers at reasonable prices," the ministry said in a statement.

Keeping in view region-specific market requirements, the limit has been fixed at 2,000 quintals for Kolkata and its extended metropolitan areas and for Assam.

Kolkata buys sugar from Uttar Pradesh, Maharashtra and Karnataka, and supplies it to eastern India, including the northeast. The limit for Assam takes into account geographical constraints, transportation facilities and consumer interest in the northeast, the ministry said.

Centre moves to curb hoarding

"The objective of the amended rules is to ensure that there is no unnecessary accumulation of sugar in the distribution chain and that there is a smooth flow of supply from sugar mills through dealers to the end consumer," it said.

The move is aimed at curbing hoarding, discouraging speculation and preventing accumulation of stocks by dealers.

In August, citing a tight supply year, the government had imposed a nationwide stock holding limit on dealers of 4,000 quintals, applicable from August 1 to November 30, along with a maximum holding period of 30 days from the date of receipt. The limit was later tightened to 2,000 quintals from September 15.

Sugar prices fall from August peak

According to the ministry, average retail sugar prices have fallen 15 per cent from their August peak and are expected to decline further as lower prices in the supply chain are realised. Ex-mill prices have dropped by around 28 per cent and have remained stable for the past three weeks.

The government reiterated that mills, dealers, wholesalers and other market participants must ensure uninterrupted movement of sugar and prevent hoarding and speculation. Wholesalers and retailers have also been urged to "immediately pass on" the benefits of the sharp fall in ex-mill prices to consumers.

Sugar mills have been advised to begin crushing operations in line with agro-climatic conditions in their areas. State governments have also been asked to take appropriate action on crushing based on prevailing circumstances.

The Centre will continue to monitor the impact of erratic and inadequate rainfall linked to El Niño conditions on sugarcane in some producing areas, and will take timely measures to balance domestic availability, consumer interest and the interests of cane farmers, the ministry said.