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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.

Less people, many choices

Writer: Abhijit Mulye
Abhijit Mulye
Dec 21, 2024
2 min read

Updated: Dec 23, 2024

The dispute over plum departments and guardianship of districts delayed portfolio allocation even after a week

dispute over plum departments

Mumbai: The difficult choice given to cabinet ministers to choose either of the plum departments or the guardianship of the districts of their liking is delaying the portfolio allocation of the ministers in Maharashtra, sources privy of the developments have said.


In the previous government the Shiv Sena as well as the NCP pulled shots. They got almost all they wanted - sometimes even at the cost of the BJP. However, with the massive mandate this time, the BJP is not ready to budge. Apart from a couple of plum departments the BJP wishes to keep all the plum portfolios with itself. Moreover, under the new scheme of arrangements between the alliance partners, the old power sharing formula is being replaced with the new one. This is likely to change the guardian ministers of most of the districts and the BJP has staked claim on guardianship of key districts, which in turn has delayed the portfolio allocation, the sources said.


Pune is one of the key districts that the BJP wants to control. During the previous government finance minister and NCP chief Ajit Pawar was also the guardian minister of Pune. However, this time the BJP, which has given two ministerial berths to Pune city in the form of Chandrakant Patil and Madhuri Misal, is keen on controlling the funds allocation in the district by staking claim on the guardian ministership. Pawar is not comfortable with this new arrangement and that is delaying the finalization of portfolios, the sources said.


Pawar wanted to keep both - the finance department as well as the guardianship of the Pune district. However, the BJP has asked him to choose between any one of these two things, the sources said. Pawar is upset due to delay in portfolio allocation. But, he is learnt to have been told that deliberations are going on to ensure there is no display of disgruntlement like the one seen after the cabinet expansion wherein several former ministers expressed disappointment over not being clearly told of being dropped from the cabinet in advance.


Attempts are being made to thoroughly discuss even the finer aspects of the new power sharing formula with as many concerned individuals as possible and to convince them to follow the formula. This is delaying the portfolio allocation, the sources added.


Meanwhile, DCM Eknath Shinde, who is facing ire of his party MLAs after he had to drop at least three of his ministers while he was the CM, mat his party MLAs in a bid to pacify them saying that those who were promised ministerial berth and were not given it stand a chance in the next expansion. However, this has led to speculations whether it was meant just to pacify disgruntled MLAs or some of the ministers in the current cabinet too are likely to be dropped in the due course of time.

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