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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.

Grave Crisis

Correspondent
Mar 18, 2025
2 min read

Updated: Mar 20, 2025

The violence in Nagpur over Aurangzeb’s tomb is an alarming sign of Maharashtra’s deteriorating law and order. A protest by right-wing groups seeking the removal of the Mughal emperor’s tomb descended into chaos, triggering communal riots that left dozens of police officers injured, vehicles torched and entire neighbourhoods in fear. That a mere rumour of desecration of a holy book could inflame passions to such an extent raises grave concerns about the state’s ability to contain mob violence. CM Devendra Fadnavis must take decisive action to restore public order before Maharashtra slides into anarchy.


A demonstration by Vishwa Hindu Parishad and Bajrang Dal activists in the Mahal area involved burning an effigy of Aurangzeb. Within hours, social media was flooded with unverified claims of a holy book’s desecration, sending thousands onto the streets in a frenzy. By nightfall, Nagpur was ablaze with arson and vandalism. The speed with which events escalated underscores the state’s failure to anticipate and neutralize such threats.


Police forces, caught napping, struggled to contain the violence, relying on lathi charges and tear gas to disperse rioters. Given that the Shiv Jayanti celebrations and the tomb protest occurred on the same day, authorities should have anticipated the potential for unrest. BJP leaders have claimed the violence was premeditated.


In recent months, Maharashtra has witnessed a disturbing pattern of lawless incidents, from the murder of Beed sarpanch Santosh Deshmukh to casteist violence in Beed to the rape of a woman in a bus stationed at Pune.


The government’s inability to curb misinformation and hold provocateurs accountable has emboldened extremists on both sides. The Maharashtra Police’s cyber wing is now investigating over 100 social media accounts suspected of spreading incendiary content, but damage control after the fact is hardly a substitute for pre-emptive governance.


The reaction from political leaders has been underwhelming. CM Fadnavis said the Mahayuti is committed to protecting Aurangzeb’s tomb as it is an Archaeological Survey of India (ASI)-designated site, but has insisted that its ‘glorification’ will not be tolerated.


Few symbols are as potent in Maharashtra’s politics as Aurangzeb’s legacy. The Mughal emperor who murdered Chhatrapati Sambhaji Maharaj is a historical villain in the state’s nationalist imagination. But the Mughal’s tomb has been here for more than centuries. So, it is not history that is driving violence today rather the state government’s inability to maintain order. Allowing the state’s governance to be dictated by street-level provocateurs, be they from right-wing Hindu groups or radical Islamist factions, sets a dangerous precedent. Political leaders must rise above identity-based posturing and focus on restoring order.


The buck stops with CM Fadnavis. The government must abandon the performative rhetoric and get their act together. That means deploying a more robust intelligence apparatus, cracking down on those who incite violence regardless of their ideological leanings and ensuring that the rule of law prevails over mob justice. The state cannot afford to let Nagpur’s flames spread any further.

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