Sugar was Rs 41.5 a kg at the wholesale market in this city last February. It is now Rs 32.76 a kg; the ex-mill price is Rs 29 a kg. From October 1, when the current season began, the wholesale price in Mumbai has fallen by 14.8 per cent.
Isma wrote to the Union food ministry: “We expect the current season’s offtake could be 25 mt, keeping 1-1.1 mt extra with mills, which is putting pressure on prices.” It has asked for permission to export one mt, for which the current 20 per cent duty should be immediately withdrawn; global prices are much lower than India’s.
It also wants a 100 per cent import duty on sugar; Pakistan’s price is much lower and it is expected to notify a Rs 11 a kg subsidy in the near future to incentivise export.
Last week, the National Federation of Cooperative Sugar Factories (NFCSF) proposed the government create a buffer stock of two mt.
The way sugar prices are falling, “the government has also advised the mills that they not be in a hurry to sell their sugar below cost, which in turn will adversely impact cane price payments to farmers”, said a leading industry official, who met food ministry officials last week.
According to Dilip Walse Patil, president of NFCSF, “Mills are incurring Rs 6-7 a kg loss, as ex-mill prices are far lower than their cost of production.” Isma, which represents private mills, says their members’ average cost of production is Rs 35-36 a kg.
DCM Shriram, which declared its results on Saturday, said its sugar business was in a tough situation, with a pre-tax loss of Rs 200 a quintal.