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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.

CJP Must Remain as Watchdog

Writer: Abhilash Khandekar
Abhilash Khandekar
Aug 2
4 min read

After forcing Dharmendra Pradhan’s resignation, the Cockroach Janata Party faces a defining choice: remain an independent citizens’ watchdog or risk losing its credibility by entering electoral politics.

Minutes after Dharmendra Pradhan resigned ‘on his own’, a friend from Delhi who understands politics very well called me in an exalted voice. Having followed Indian politics closely for over 60 years, the businessman felt the Cockroach Janata Party (CJP) would win 100 seats across India in the next general elections considering the zenith it had reached in popularity.


He also had valid reasons to offer in support because he detests BJP’s overall governance in New Delhi and in states like MP or Maharashtra, despite having had good friends within the saffron party. I instantly disagreed.


Knee-Jerk Response

The CJP is a very young grouping, having been born in May this year, as a knee-jerk response to the weird and shocking comment by Chief Justice of India Surya Kant while hearing a petition. What may have prompted Abhijeet Dipke to swiftly post on X, asking, “What if all cockroaches come together?”, is not known. But the non-political platform opposing the “rotten system” came together before you could even spell cockroach.


It is a fact that while the Bharatiya Janata Party (BJP) and its Government at the Centre suffered greatly in the process, the remark came from none of its leaders who are otherwise known for insulting anyone and uttering anything at any time. The power-drunk BJP leaders have embarrassed the party umpteen times, not even sparing women army officers or women wrestlers.


However, in this case, it was a top judicial officer of the country who triggered a storm and Pradhan became the scapegoat. Of course, I have no sympathy whatsoever for the former Union minister because he was clearly incapable of handling a ministry which was headed by political stalwarts like Narasimha Rao, MM Joshi, Arjun Singh and Madhavrao Scindia in the past. The CJP was thus born in the Supreme Court, brought up in Boston where Dipke was studying and started running at Jantar Mantar in June. Everything happened with electrifying speed.


Having claimed the scalp of Pradhan after a long-drawn struggle, the Gen Z has heightened the expectations of millions who are victims of poor governance and corruption. CJP must function as a fierce watchdog.


Farmers, students, businessmen, women, the middle class and those who are ideologically anti-BJP all see a ray of hope in CJP to check corrupt practices and make BJP accountable. This is because Rajnath Singh, whom I personally like, is a seasoned and honest leader of the party and one who talks less. Yet, in another context, he made that pompous statement “NDA me istiphe nahi hote” (None resigns in NDA regime). CJP capitalized on it while setting a single-point agenda of its unique protests in New Delhi in June.


Bad Governance

Examination paper leaks, similar to the shady Vyapam scam of Madhya Pradesh, are crimes governments committed against the lives of students and job-seekers. In both cases it was BJP under which it all happened. BJP has always talked in glowing terms about its ‘good governance’. Paper leaks and Vyapam were specimens of bad governance of the highest order.


Dipke and his core group were intelligent enough to pick the pulse of students and parents and carefully launched the massive agitation which grew by the day to spread across the country. But now they should stop, look back and reorganize their strategies.


As I see it, CJP has now emerged as a solid pressure group that took up the issue of a totally collapsed education system, headed by Pradhan since 2024. How well-knit a force CJP will remain in the months to come is yet to be tested. But they should be thanked for reopening the blocked path of peaceful demonstrations in the country for exposing the wrongs.


There are already ideas floating and, as my friend hinted, some of the CJP members are nursing political ambitions.


I strongly feel that CJP must abhor politics. It should remain what it is—an altruistic platform to set wrong things right in sectors like education, health and the environment.


Everyone knows Dipke has links with the AAP and Arvind Kejriwal but he has been able to create an apolitical image today which is unmatchable.


The way Kejriwal and his party have performed over the last few years is a burning example of what happens when activists turn into politicians in India’s hopeless political system. Raghav Chadha’s case is another example. He did not utter a single word on students’ and Gen Z’s concerns for which he was well-known before joining the ruling BJP. Elected politicians are meant to raise their voices for the people when they need them but the otherwise vocal RS member, Chadha, was hidden deep inside an unseen burrow.


If CJP becomes a political party, it will run the risk of getting sucked into the quagmire of dirty Indian politics. It should resist that temptation, for it cannot match the cunning of the BJP, the Congress or the NCP.


(The writer is a senior political and environment journalist based in Bhopal. Views personal.)

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