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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.

Is Mumbai Ready to Tackle Daily Challenges for a Sustainable Future?

Jan 17, 2025
4 min read

Updated: Jan 20, 2025

India’s financial capital grapples with water scarcity, aging infrastructure and climate volatility, striving for a sustainable future where every drop matters.

Sustainable Future

Mumbai, India’s bustling financial capital, is a city of contrasts. Home to over 20 million people, it teeters on the brink of a water crisis, where rapid urban sprawl, unchecked development, and the encroachment on natural water bodies threaten the city’s fragile resources. As temperatures rise and rainfall patterns become increasingly erratic, the city’s already strained water supply faces a perfect storm of challenges—overburdened by population growth, inefficient distribution, and the looming spectre of climate change.


In Mumbai, the relentless march of urbanization has left its mark on the city’s water quality. Untreated industrial and domestic waste pour into once-pristine water sources, rendering them unsafe for consumption. Rising sea levels exacerbate the problem, allowing saltwater to infiltrate freshwater supplies, further jeopardizing the city’s access to potable water. As Mumbai’s population swells, the strain on its water resources grows ever more palpable. The monsoons, a critical source of replenishment, are now unpredictable, with the city’s water supply depending heavily on distant reservoirs and lakes. This reliance makes Mumbai acutely vulnerable to the disruptions brought on by climate variability, a ticking clock on an already fragile system.


Despite an average daily supply of 3,800 million liters, the demand for water often outpaces its availability, leading to major water shortages. Further, unpredictable and heavy rains have also led to increasing flooding and water contamination. Adding to these issues are Mumbai’s burgeoning informal settlements, which house nearly half the city’s population and lack access to clean water and sanitation, amplifying health risks and widening the city’s socio-economic disparities. This challenge is however, exacerbated by the aging infrastructure, that significantly contributes to the loss of water through leaks and unauthorised connections that leads to high levels of non-revenue water. Due to the city’s outdated drainage system, heavy monsoon rains are a cause for severe urban flooding. The rising sea levels worsen the risk of flooding in Mumbai’s coastal low-lying areas.


Mumbai’s aging water supply and distribution systems are at the heart of its water woes, with chronic leaks and inefficient delivery contributing to a growing crisis. Meanwhile, the city’s stormwater management infrastructure is ill-equipped to handle the increasingly erratic weather patterns brought on by climate change. As population growth, rapid urbanization, and climate unpredictability converge, Mumbai’s challenges demand a holistic response—one that integrates forward-thinking urban planning, robust investment in resilient water infrastructure, and policies prioritizing sustainability and equitable resource distribution. The city’s path to a smarter, more sustainable water future hinges on the adoption of cutting-edge technologies, infrastructure upgrades, and a collaborative approach to governance, aiming to turn these pressing issues into opportunities for lasting change.


Mumbai monsoon rains, essential for meeting the city’s annual water needs and for replenishing Mumbai’s water reservoirs, present a paradox due to their uneven distribution. On one hand, the rains act as a lifeline, ensuring an adequate water supply for millions of residents. However, their intensity and unpredictability often lead to severe flooding, infrastructure damage and waterlogging, disrupting the city’s daily life. Simultaneously, periods of deficient rainfall can result in drought-like conditions, reducing water availability and impacting agricultural and urban needs. This duality makes managing Mumbai’s monsoon rains both a blessing and a challenge for sustainable water resource management.


Informal settlements, housing nearly half of Mumbai’s population, lack formal planning and adequate infrastructure, leaving residents vulnerable to water challenges. Monsoons contaminate scarce supplies, while dry spells cause acute shortages, forcing reliance on costly or unsafe sources. Inclusive policies are urgently needed to address urban water inequality.


Currently, Mumbai is facing a significant water crisis. Due to this year’s delayed and insufficient monsoon rains, the city’s reservoirs are running dry. Increasing construction and deforestation are adding to this water scarcity. The Brihanmumbai Municipal Corporation (BMC), which is responsible for managing the city’s water supply, has reported that the seven lakes supplying water to Mumbai currently hold less than 10 percent of their total storage capacity, the lowest levels recorded in recent years. This water shortage has thus imposed water cuts of up to 10 percent across the city.


The growing population and water demand exceeding 4,500 million liters daily strain Mumbai’s supply infrastructure. While the BMC urges conservation and planned distribution, sustainable solutions like infrastructure upgrades, demand management, and enhanced rainfall capture are crucial. Integrating advanced technology and sustainable practices is key to smarter water management.


The government should install smart meters for accurate billing and consumption tracking, while IoT devices monitor water quality and distribution. Mandating rainwater harvesting and expanding wastewater treatment will reduce dependency on external sources. AI-driven flood models, improved drainage and afforestation can help manage monsoon waterlogging. Modernizing infrastructure with these technologies offers a path to sustainable water management.


By turning its challenges into opportunities, the city can create a resilient and sustainable water ecosystem that serves as a lifeline for its people and economy. With innovation and smart solutions, Mumbai can transform its water crisis into a model of resilience, ensuring every drop counts for its future.


(The author is an educationalist. Views personal.)

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