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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.

Tiger’s Expanding Shadow

Writer: Abhijit Mulye
Abhijit Mulye
Jun 30
3 min read

Mumbai: In the unforgiving theater of the state politics, symbolism is often the precursor to a tectonic shift. By masterminding the unexpected move to field Shiv Sena (UBT) MLC Sachin Ahir for the coveted post of Deputy Chairman of the Maharashtra Legislative Council, Deputy Chief Minister Eknath Shinde has done much more than simply poach a high-profile rival. He has sent an unequivocal message across the political spectrum: ‘Operation Tiger’ is far from over.


This aggressive expansion drive, initially aimed at consolidating Members of Parliament, is now systematically drilling down to legislators, municipal corporators, and the very grassroots foundation of the Uddhav Thackeray-led faction. However, while this tactical victory further decimates the opposition Maharashtra Vikas Aghadi (MVA), the collateral anxiety it has generated is being felt most acutely not within the UBT camp, but deep within the ranks of Shinde’s own senior ally, the Bharatiya Janata Party.


To understand the gravity of Shinde’s relentless political expansion, one must trace the genesis of his rebellion back to the very same upper house. It was the fateful MLC elections of 2022 where the then-ruling MVA suffered a humiliating defeat, losing a crucial seat to the opposition BJP. The blame for this cross-voting debacle was squarely placed on Eknath Shinde by the Uddhav Thackeray coterie. That slight became the catalyst for the most spectacular political coup in the state’s recent history.


A deeply hurt Shinde broke ranks, splintered the Shiv Sena, and ultimately brought the MVA government under Uddhav Thackeray crashing down. The BJP, still smarting from Thackeray’s 2019 decision to abandon their pre-poll alliance in favor of the Congress and the Nationalist Congress Party, not only fanned the flames of Shinde’s rebellion but actively bankrolled his ascent. In a move that stunned political pundits across the country, the BJP installed Shinde as the Chief Minister—an investment they believed would permanently relegate the Shiv Sena to a subservient, manageable role.


Political Emancipation

For the ordinary BJP worker on the ground, the splintering of the Shiv Sena felt like a long-awaited political emancipation. For decades, the BJP grassroots had harbored a deep-seated grievance of being forced to play second fiddle to a domineering regional partner. The vertical split engineered by Shinde relieved that historical pressure. This newfound dominance was brilliantly cemented in the 2024 state assembly elections, where the BJP delivered a spectacular standalone performance, sending a record-breaking 132 legislators to the lower house. For the first time in the truest sense, the common BJP party worker tasted the unadulterated fruits of absolute political hegemony. They were the undisputed big brothers of the ruling Mahayuti alliance, dictating terms and driving the state’s overarching political narrative.


But Shinde’s surprise gambit with Sachin Ahir has violently disrupted this comfortable status quo. It confirms that he is not content merely surviving as a BJP-propped proxy. Under his astute leadership, his faction of the Shiv Sena has steadily mutated into a formidable political machine in its own right. By persistently absorbing the residual strength of the UBT faction, Shinde is systematically rebuilding the undivided Shiv Sena’s original architecture, just with a different captain at the helm. Operation Tiger is clearly no longer just about numerical survival; it is a meticulously planned project for absolute resurrection.


Palpable Sense

This relentless consolidation has triggered a palpable sense of dread among the BJP foot soldiers. The murmurs on the ground are increasingly anxious, painting a picture of an alliance marked by silent internal friction. If Shinde continues to successfully woo the remaining legislators, corporators, and shakha pramukhs from the Thackeray camp, his Sena could very well regain the organizational muscle and street-level dominance of the undivided era. The BJP leadership’s short-term strategy to use Shinde to annihilate the Thackerays might inadvertently breed a political behemoth they can no longer control.


For the seasoned BJP cadre, the impending power dynamics within the Mahayuti combine look increasingly precarious.


The immediate goal of keeping the MVA out of power is being achieved, but they are now questioning at what cost to the BJP’s own regional supremacy. As Eknath Shinde’s political stature grows by the day, the fundamental question haunting the local BJP karyakarta is no longer about today’s legislative arithmetic. It is an existential apprehension looking toward the future: If Shinde succeeds in wholly appropriating the legacy, cadre, and strength of the original Shiv Sena, the BJP may find itself right back where it started by the 2029 elections—forced, once again, to play the reluctant junior partner in its own political backyard.


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