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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.

Can India become a Vishwaguru?

Prof Jagannadha Pawan Tamvada
Aug 21, 2024
2 min read

Updated: Oct 21, 2024

Can India become a Vishwaguru?

While attending an academic conference and staying near the very place where Swami Vivekananda addressed the World Parliament of Religions in Chicago, I was tempted to quote lines from his famous speech in 1893 that highlighted the magnificence of Hindu thought:

“I am proud to belong to a religion which has taught the world both tolerance and universal acceptance. We believe not only in universal toleration, but we accept all religions as true. I am proud to belong to a nation which has sheltered the persecuted and the refugees of all religions and all nations of the earth.

I will quote to you, brethren, a few lines from a hymn that I remember to have repeated from my earliest boyhood, which is every day repeated by millions of human beings: ‘As the different streams having their sources in different paths which men take through different tendencies, various though they appear, crooked or straight, all lead to Thee.’”

Swamiji’s clarion call in his speech to end “all uncharitable feelings between persons wending their way to the same goal” presents a new basis for the social, political, and economic transformation of the world. Going beyond the divisions of power, wealth, or religion, we need new thinking to create inclusive models of socio-economic progress that will see nations cooperate in the fields of education, entrepreneurship, technology, and sustainability to empower humanity to flourish collectively. In practice, this will reflect in the cessation of all wars, bringing back fairness in our collective conscience and demonstrating a willingness to share know-how to enable all humanity to progress. But how can such a goal be achieved? India can play an instrumental role by initiating new partnerships in the field of education around the world. Ancient Indian knowledge, with its emphasis on the oneness of spirit and value-based learning, can transform students’ formative attitudes in schools and colleges leading to a new generation of responsible global citizens and leaders. It can inspire inclusive policy-making in countries around the world, as it has done in India. For instance, by banking the unbanked and aiming to provide healthcare, food, and energy security to all households, India is implementing its age-old wisdom to take everyone forward.

Through initiatives such as the International Solar Alliance, International Yoga Day, start-up support, vaccine diplomacy, and presenting the G20 with the theme “Vasudhaiva Kutumbakam” (the world is one family), India has emphasised the principles of shared prosperity that define its global leadership.

India offers a glimmer of hope to a world torn apart by terrorism, exploitation, inequality, and racism because the spirit of love, acceptance, and tolerance, gushing through its arteries and veins, is ever reinforced by the belief in the oneness of God in its heart as Swamiji said in Chicago. The time has come for this unique message to reverberate worldwide, having within itself precious seeds of universal brotherhood, peace, and progress. And India is uniquely placed as the Vishwaguru with the moral authority to deliver it emphatically.

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