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News
Haryana safe haven for sugar hoarders
Date:
16 Aug 2016
Source:
The Financial Chronical
Reporter:
Prabhudatta Mishra
News ID:
5864
Pdf:
Nlink:
In the last week of April, the food ministry allowed states to impose stockholding limits on dealers or traders
Traders have found a safe haven in Haryana to hoard sugar as the state has not yet imposed a stockholding limit nor is there any indication of it being implemented in the near future.
In the last week of April, the food ministry allowed states to impose stockholding limits on dealers or traders for up to a maximum of 500 tonnes per state. For West Bengal, the limit is 1,000 tonnes, as Kolkata is the main trading hub for the commodity catering to entire North East.
The three major producing states, UP, Maharashtra and Karnataka, as well as Delhi, have so far imposed the stock limit. Delhi being the main trading centre for sugar, traders find the neighbouring states best suited for hoarding stocks, an industry insider said.
“Traders feel safe to hoard in Haryana, which is yet to impose a stock holding limit” he said. A few large Delhi traders have reportedly stocked about 7-8 lakh tonnes of sugar in Haryana, sources claimed. Financial Chr-onicle could not authenticate the claim independently, as the commodity is now deregulated from government control. However, following a tip-off, the food ministry has written to all the states, including Haryana, to immediately enforce the stock holding limit, official sources said.
Food secretary Vrinda Sarup reviewed the price situation on July 28, while interacting with officials of sugar producing and consuming states. There was a suggestion from the sugar directorate to bring back the release order mechanism under which every mill was allotted a quota each month to sell in market. The mechanism was discontinued from 2013.
On August 12, food minister Ram Vilas Paswan said the government was keeping a close watch and would take necessary action if prices rose above the current level. He asked sugar mills to keep prices stable. Sugar prices are currently ruling at Rs 42-45 per kg in Delhi’s retail market.
“Yes, prices should not go beyond the current level,” Indian Sugar Mills Association (ISMA) president Tarun Sawhney told FC. At the same time, he said the current price was not the average rate of the season that mills received. It was much lower.
He also said only mills cannot be held responsible for the price movement, which is impacted by several other factors. He declined to comment on hoarding or the government’s plan to reintroduce the release order mechanism. “It is all speculation. Too many speculative reports are appearing in the media,” he said.
According to Sawhney, the total debt of sugar mills has reached Rs 50,000 crore from nearly Rs 10,000 crore in 2010. To make the mills viable, there is a need to help them clear the debt in order to facilitate further investment, he said.
With a closing balance of 7.1 million tonnes expected at the end of the 2015-16 season (October-September), and an estimated production of 23.3 million tonnes next year, there would not be any problem on availability in 2016-17, he said.
The country’s annual sugar consumption is pegged at 25.5-26 million tonnes.
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