Wired up: State plans online sugar trading

PUNE: Trading in commodities has traditionally been regarded as being opaque and determined by external and extraneous factors. When the commodity is sugar then the belief is strengthened that the prices are fixed by long time buyers along with the factory management.

In a move to break this nexus, the state Sugar Commissionerate and the Vasantdada Sugar Institute, a technical body set up by the industry, has proposed moving sugar trading to the internet.

"Maharashtra has monthly sales of 10 lakh bags of sugar. All of this will not move to the net, of course. So, we will allow mills to trade on both, manual and internet, where the rates will be synchronised," Apoorva Chandra, sugar commissioner, Maharashtra, said.

The Rs 35 lakh-worth project, in which the Sugar Commissionerate and the VSI will each contribute Rs 15 lakh, the balance Rs 5 lakh coming from the Maharashtra Rajya Sahakari Saakhar Sangh. Mr Chandra said they could charge the sugar mills a nominal amount, of about Rs 10,000 annually, as maintenance. This would make the project self-sustaining, he added.

The server will be located in the offices of the Sugar Commissionerate. While mills will call for bids in both, manual and digital form, they will be matched and then opened at a synchronised time, to avoid any malpractice.

The advantage of moving the trade to the net was to ensure more participation than just those who have been regularly trading with a particular mill in their region. Officials admitted that only the strong mills are likely to move to the net, for now.

-GOURI AGTEY ATHALE
Economic Times
February 24, 2006