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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.

Marathwada, Vidarbha turn hotter and drier

Quaid Najmi
25 minutes ago
3 min read

Mumbai: As Maharashtra reels under a drought across 265 of its 358 talukas, an analysis of 70-year weather records by India Meteorological Department (IMD), Pune, scientists revealed a deep climate divide: while Marathwada and West Vidarbha have shifted into a hotter, drier climate zone, the wettest climate zone has expanded along the coastal Konkan.


 The study findings suggest that the state’s agricultural heartland is facing a double whammy - a drastically changing climate that is making the hinterland hotter and drier, which was compounded this year by the El Nino-weakened monsoon that left vast areas with rainfall deficits. El Nino effects are likely to impact even the summer monsoon in 2027.


Conducted by scientists from the IMD and the Indian Institute of Tropical Meteorology (IITM), Pune, the study has been published in the latest (October 2026) issue of MAUSAM, the IMD’s peer-reviewed journal, and incorporates data from 1951-2020.


 Comparing successive 30-year periods - the standard duration used to assess climate patterns – the researchers found that Marathwada and West Vidarbha, which largely belonged to the tropical savannah zone during 1961–1990, had shifted into the hot semi-arid zone by 1991–2020.


This transition reflects an increase in daytime and night-time temperatures, placing the two drought-prone regions in a climate characterised by greater heat and low rainfall – spelling doom for the local agro-economy.


In sharp contrast, the tropical monsoon zone - India’s wettest climate belt, marked by heavy seasonal rainfall - has extended across the coastal belts of Maharashtra’s Konkan, Goa, Karnataka and Kerala.


“The spread of the wettest zone along the coast aligns with a broader pattern in the study: rainfall has increased over southern India even as it has declined over the northern plains, so Maharashtra's interior and coastline have changed in opposite directions,” said the study.


Maharashtra’s interior and coastline, however, illustrate how climate shifts can produce sharply different outcomes within the same state, said the researchers.


Significantly, the climatic changes in Marathwada and west Vidarbha are not apparent from aggregate figures for central India, where the hot semi-arid zone contracted slightly. The study’s detailed climate maps, rather than broad regional averages, reveal the transformation affecting Maharashtra’s interior.


 This had immediate repercussions for a state where farming remains heavily dependent on monsoon rainfall. On Sep. 26, Maharashtra declared drought in 265 talukas after the monsoon ended 19-pc below normal. Nationally, the rainfall was 12.6-pc below normal, while Goa recorded a 34-pc shortfall and 28-pc deficit in Kerala and coastal Karnataka.


"This year's drought in Marathwada and Vidarbha is an El Niño drought, and our study does not look at individual seasons, but it does show that Marathwada and west Vidarbha now lie in a hotter, drier climate zone than they did in the 1960s, so a failed monsoon like this one lands on a climate that has itself shifted, and water and farm planning in the region has to account for that," said Ananya Karmakar of IMD Pune, the study's lead author.


“El Niño has left Maharashtra and much of the west coast well short of rain, with drought declared across most of the state's talukas. Our records show that such shocks now land on a region whose climate has been changing in two directions, with Marathwada and west Vidarbha becoming hotter and drier and the Konkan and the coast to its south becoming wetter, which is the kind of long-term change IMD needs to build into its advisories to the state's farmers," said Mrutyunjay Mohapatra, Director General of Meteorology and a co-author of the study.


 The researchers stress that changing climate zones can influence crop suitability and sowing schedules, making it essential to reassess agricultural strategies rather than rely solely on historical rainfall patterns.

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