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By:

Rajendra Joshi

3 December 2024 at 9:20:26 am

Sugar industry strains as traders reap profits

Gap between ex-mill prices, retail rates raised questions Kolhapur: The Indian sugar industry is caught in a deepening crisis, with sugar mills struggling to secure remunerative prices for their produce even as traders and middlemen appear to be making substantial profits. While sugar mills are receiving between Rs 4,600 and Rs 4,800 per quintal through recent sale tenders, retail prices have remained as high as Rs 58 per kg. The widening gap between ex-mill prices and retail rates has...

Sugar industry strains as traders reap profits

Gap between ex-mill prices, retail rates raised questions Kolhapur: The Indian sugar industry is caught in a deepening crisis, with sugar mills struggling to secure remunerative prices for their produce even as traders and middlemen appear to be making substantial profits. While sugar mills are receiving between Rs 4,600 and Rs 4,800 per quintal through recent sale tenders, retail prices have remained as high as Rs 58 per kg. The widening gap between ex-mill prices and retail rates has raised serious questions about the role of intermediaries and the effectiveness of the Centre’s efforts to contain sugar prices. The margins available to traders and intermediaries have reportedly crossed 20 per cent, leaving sugar millers perplexed. At a time when both sugarcane growers and mill operators are under financial pressure, the trading chain appears to be benefiting disproportionately. The Centre must examine this growing disparity and take corrective measures to prevent speculative profiteering. Retail sugar prices began rising sharply in August, touching nearly Rs 70 per kg in some markets. The escalation added to inflationary pressures and caused concern among consumers, particularly ahead of the festive season. In response, the Centre introduced a series of measures to improve domestic availability and moderate prices. These included permitting duty-free sugar imports, initially until October 31, a deadline subsequently extended to December 31. The government also directed sugar mills to commence the crushing season from October 15 and tightened monitoring of sugar stocks. In another significant intervention, it modified the ethanol policy, restricting the diversion of sugarcane juice, sugar syrup and B-heavy molasses for ethanol production. Following these measures, sugar mills began witnessing a decline in the prices offered through their sale tenders. Recent transactions have fetched between Rs 4,600 and Rs 4,800 per quintal. Going by the conventional relationship between ex-mill prices and retail rates, sugar should ideally have been available to consumers at less than ₹50 per kg. However, retail prices continue to hover around Rs 58 per kg, pointing to a substantial disconnect between the mill gate and the consumer market. Traditionally, sugar retailing operated on relatively thin margins. Since sugar is an essential commodity, retailers often treated it as a low-margin product to attract customers who would subsequently purchase other household provisions. The margin was sometimes informally equated with the resale value of the empty 50-kg jute bags in which sugar was supplied. This was considered a nominal return for retailers. That traditional pricing mechanism, however, appears to have undergone a significant change. The widening gap between mill-level tender prices and retail rates has created considerable scope for intermediaries to extract higher margins. The critical question is whether the additional amount paid by consumers is reaching the sugar mills or remaining within the trading chain. The issue assumes particular significance in Maharashtra, where the sugarcane pricing dispute has intensified ahead of the new crushing season. Farmers’ organisations have been demanding a minimum price of Rs 5,500 per tonne for sugarcane. Millers, meanwhile, are preparing to agitate for a revision in the Fair and Remunerative Price (FRP) framework and the restoration of a more supportive ethanol policy. The Swabhimani Shetkari Sanghatana, led by Raju Shetti, has taken a firm position that sugar mills should not be allowed to commence operations until farmers receive an acceptable price for their cane. Shetti has also drawn the state government’s attention to the unusually high retail prices of sugar, questioning why consumers continue to pay more even as mills are forced to sell at relatively lower rates. The Centre’s sudden changes to the ethanol policy have further complicated the industry’s financial position. Ethanol production had emerged as an important revenue stream for sugar mills, enabling them to diversify operations, improve cash flows and enhance their capacity to pay farmers. Restrictions on the diversion of sugarcane-based raw materials have weakened this support at a critical juncture. The resulting contradiction is difficult to ignore: farmers are demanding better cane prices, millers are struggling with shrinking realisations and policy uncertainty, while intermediaries appear to be benefiting from the gap between wholesale and retail prices. The government cannot address the sugar crisis merely by regulating mill stocks, imports and ethanol diversion. It must also examine the entire supply chain, identify where the widening margins are accruing and ensure that the benefits of market interventions reach both sugarcane growers and consumers. With nearly Rs 2 lakh crore riding on the sugar economy, allowing intermediaries to thrive while the industry’s primary stakeholders struggle would be a serious policy failure.

A Test of Prestige for the BJP in Eastern Vidarbha

Writer: Kiran D. Tare
Kiran D. Tare
Oct 22, 2024
3 min read
Eastern Vidarbha

As the election draws nearer, the Bharatiya Janata Party (BJP) finds itself locked in a high-stakes contest in Eastern Vidarbha, particularly Nagpur—a region long considered the heart of its ideological and political machinery given that the Rashtriya Swayamsevak Sangh (RSS) has its headquarters here.


This particular electoral battle transcends mere numbers as the very prestige of the party’s state unit is at stake this time, especially with key figures like Deputy Chief Minister Devendra Fadnavis, state BJP President Chandrashekhar Bawankule and senior leader Sudhir Mungantiwar in the fray and the presence of Union Minister Nitin Gadkari looming large.


Among the 23 candidates nominated by the BJP in Vidarbha, an impressive 19 are incumbent MLAs. Bawankule, in particular, is eager to reclaim his place in the political landscape after a hiatus from electoral contests since 2014. His previous exclusion from the ticket in the 2019 Assembly elections is believed to have cost the BJP several seats, especially given his affiliation with the Teli community, which boasts a significant voter base.


Under Fadnavis’ leadership, the party has spearheaded substantial infrastructural projects, including the Nagpur metro.


The transformation of districts like Gadchiroli, Bhandara, Gondia, and Chandrapur from hotbeds of Naxalism to areas now declared ‘Naxal-free’ is a testament to the decisive action taken by the erstwhile Fadnavis government and present Eknath Shinde-led Mahayuti coalition, supported by central forces. This substantial victory over Maoist elements will be touted as a key achievement by the BJP in Vidarbha. The decimation of Naxal influence and the establishment of a climate conducive to industrial development, creating new employment opportunities will be the BJP’s plank as it reaches out to voters here.


Fadnavis, once the undisputed face of the BJP in Maharashtra, hails from Nagpur and has deep roots in the region. However, the party’s poor performance in the Lok Sabha elections, has raised doubts about whether Fadnavis can rally the base for a more convincing mandate this time around. For Mungantiwar, the challenge this time is even more daunting given his abysmal performance in the Lok Sabha, where he lost heavily in the Chandrapur Lok Sabha contest to the Congress’ Pratibha Dhanorkar, trailing by more than 48,000 votes from his own Assembly segment stronghold of Ballarpur.


Traditionally, the contest in Vidarbha has been between the two national parties – the Congress and the BJP, which has eaten into the Congress’ pie since 2014. However, an attenuated Congress maintains a formidable presence in this region, posing a significant threat to the BJP’s dominance. Even today, the party has the maximum number of MLAs concentrated in the entire Vidarbha region, 15 of its total strength of 45.


Vidarbha has produced three Chief Ministers for the Congress—Maratrao Kannamwar, Vasantrao Naik, who remains the state’s longest-serving CM, and Suddhakar Rao Naik (Fadnavis being the fourth CM from this region). The Congress has also maintained a strong cadre of second-line leaders, with influential figures such as Maharashtra Pradesh Congress Committee (MPCC) chief Nana Patole, Leader of Opposition Vijay Wadettiwar, and former ministers Nitin Raut and Sunil Kedar, all important players from this belt.


As it faces a charged-up Congress on November 20, the eyes of Maharashtra will be on Eastern Vidarbha, where the BJP’s prestige hangs in the balance. As the BJP locks horns with a formidable Congress in Eastern Vidarbha, the Assembly election here is a fight for the saffron party’s identity, transcending mere numbers.

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