The Centre has sought action against sugar millers selling below the minimum support price (MSP) amid complaints from some millers and industry associations that several mills were flouting rules and underselling the sweetener.

 

“Sugar mills of your state may be advised to strictly adhere to directives of Government regarding MSP of white/refined sugar and action may be taken for violation of Sugar Price (Control) Order,” the food and public distribution department has stated in a note issued on March 20. The ministry has written that some mills are selling sugar below the MSP while others are selling sugar at MSP inclusive of a nationwide sales tax, which is in breach of the directive. The Sugar Price (Control) Order, 2018 allows the government to conduct searches in factories, and penalties include the possible seizure of stocks of mills violating the rule.

 

Maharashtra sugar commissioner Shekhar Gaikwad confirmed that the letter had been issued to the cane commissioners last week, adding that the Centre may have received complaints of this nature and therefore issued the note. The commissioner has called for a meeting of millers on Thursday to review the situation. “We want to understand how serious the issue is and the extent of the problem,” he told FE. The sugar mills are facing a cash crunch as they also have to pay the Fair and Remunerative Prices to buy cane from farmers at a time when there is a glut of sugar, and they are heavily in arrears in those payments. In Maharashtra, the arrears are amounting to Rs 5,000 crore despite all measures taken by the government to improve liquidity.

 

The National Federation of Cooperative Sugar Factories has written to all member sugar factories regarding the strict compliance of MSP under Sugar Price (Control) Order 2018. In a note to the mills, Prakash Naiknavare, MD of the federation, said that the government has already announced various measures to curb mounting cane arrears of sugarcane growers by improving liquidity position of sugar mills, which include fixation of MSP of white/refined sugar at Rs 2,900 per quintal and later increasing it by Rs 200 to Rs 3,100 per quintal. Therefore, if any sugar is selling below the MSP inclusive of GST or transportation charges or both, it will be tantamount to violation of Sugar Price (Control) Order, 2018 and action will be taken accordingly, he said.

 

“This is a very serious issue and has to be seen in the context of sales by millers between February 15 to February 28 and from March 1 till date.” “We have closely watched the situation and have noticed that no sale has taken place in the cooperative sector during these two periods which has adversely impacted cash flows. In contrast, a large quantity of sale has happened by private millers in the stipulated period,” he said.

 

“Millers have been underselling and have found a procedure whereby on paper the sugar is sold at Rs 3,100 per quintal and a credit note is issued to adjust prices, and traders are also part of this process. We have written to both member factories and the government to deal with it,” he said.