Maharashtra has decided to purchase levy sugar through the NCDEX Spot Exchange. The decision comes as a surprise to both sugar millers and traders in the state.

The government has invited suppliers for supply of S-30 under PDS for the year 2014-15 through the e-procurement mode. Earlier this year, the government after a meeting with the Maharashtra State Cooperative Sugar Factories Federation (MSCSFF) decided to procure sugar from the mills directly. When contacted Sanjiv Babar, president, MSCSFF said the the government had withdrawn the proposal since the rates proposed by the mills were not acceptable to the government.

The government has not taken a decision on the purchase of levy sugar since July this year. He said the average price of the first 25 days of a month had been proposed as the procurement price by the federation.

But this was not acceptable and therefore the sugar will now be procured by the Centre through the NCDEX spot exchange. Some of the millers who do not wish to come on record mentioned that if the government opts for the NCDEX spot exchange, then it will have to pay as per the spot rates of the day and this was definitely not viable.

The monthly PDS requirement of the state is 1.39 lakh quintal but during the festival months of Ganapati and Diwali, it goes up to 1.84 lakh quintal per month. It may be mentioned here that tenders issued twice by the government failed to elicit any response from both sugar mills and traders owing to the high earnest money deposit ( EMD) in the range of Rs 1 crore to Rs 5 crore depending on the quantity.