For the first time ever, Maharashtra’s sugar mills are getting into retail sales of sugar to overcome liquidity issues. Sugar mills in the state have been struggling to make Fair and Remunerative Price (FRP) payments to farmers in the face of falling sugar prices and therefore have decided to get into retail selling to come out of this crisis.
Maharashtra sugar commissioner Shekhar Gaikwad said there are no legal issues involved in the direct sale of sugar by mills in the retail market and they could sell sugar in the packs of 50 kg without any problem.
On Wednesday, the Commissioner kicked off sugar sales from the retail outlet set up outside the factory gates of Shrinath Mhaskoba Sugar Factory in Shikrapur, Daund Taluka of Pune district.
Gaikwad told FE that the factory sold 50 quintals in a single day after the retail outlet was opened. This is a very innovative model which I propose to suggest to the MDs of all sugar factories. In times of crisis like this, to prevent the situation from getting out of hand like in the case of the onion sector, sugar mills also need to get aggressive on the sale front and adopt new ways to reach out to the market.
The Centre has fixed the minimum floor price (MFP) of sugar at Rs 2,900 per quintal in June after sugar prices were on the downslide. Apart from a package of Rs 8,500 crore to help sugar mills pay FRP dues, the Centre also set a minimum price for sugar at Rs 2,900 per quintal. According to the Commissioner, sugar sales have been down by 20% as against the given quota. Significantly, while the millers complain that they are not getting prices for sugar, the consumer ends up buying sugar at not less than Rs 35 per kg. Gaikwad, therefore, felt that the retail route would be ideal for sugar millers to get better prices. Taking GST and handling charges into account, the prices of sugar would come up to Rs 32.50 per kg. For direct purchase from the factories, the prices would come up to Rs 32 per kg and Rs 33 per kg for home delivery, he said.
The commissioner said that the scheme is being implemented on a pilot basis at Shikrapur and there is a plan to extend this to other factories in a phased manner. Sant Tukaram Cooperative Sugar Factory of Pune district plans to establish a retail outlet in the city soon.
Sweet shops, cold drink manufacturers are expected to be the target buyers from such retail outlets. So far, it has been easy on the factories who sold sugar through tenders but they also have to adopt other models like keeping an inventory of possible buyers who may require sugar in bulk and tap them, he said. If a small factory in Shikrapur can sell 50 quintals in a day, other factories can also do the same, he said. This will free up their stock position and bring in liquidity, he added.
Welcoming the move of the Sugar Commissionerate, Sanjay Khatal, MD, Maharashtra State Cooperative Sugar Factories Federation (MSCSFF) said such experiments may work on a stray basis. The practical feasibility of establishing retail outlets on a mass scale by sugar factories needs to be seen, he added. Such retail outlets would require added manpower, which would add to salary overheads of factories, he said adding that consumers would expect prices to be much lower at such retail outlets.