New Delhi: As campaigning for the Lok Sabha polls reaches a crescendo, the Centre has flooded the market with so much sugar that the next Government may have very little stocks to play with.
While
the policy of aggressively releasing sugar into the market has helped check
price rise in this politically sensitive commodity, it could prove to be only a
temporary sweetener, say industry observers, adding that there may not be enough
stocks left for the coming festival season.
For
the first three quarters of the current 2008-09 season (October-September), the
Centre has made available nearly 180 lakh tonnes (lt) of sugar to consumers
through its monthly 'release' mechanism.
This
includes a regular free sale quota (FSQ) of 137 lt (which mills can offload into
the open market), a levy quota of 18 lt (which they are required to deliver for
the public distribution system) and an additional six lt FSQ allocation for the
current quarter alone. Besides, 17 lt of sugar has been released through
dismantling of a 30 lt 'buffer' lying with mills that was sequestered on
Government account.
The
total 178 lt quantity translates into an average monthly release of almost 20
lt. This is two lt more than the average monthly allocations for the preceding
2007-08 season, which saw total domestic releases of 217lt. For the two election
months of April and May, the Centre has pegged released at 23-24 lt - a third
more than last year's levels!
|
Sugar releases during 2008-09 season
(Lakh Tonnes)
|
|
|
Levy
|
Free
Sale
|
Buffer
Stock
|
Extra
Release
|
Total
|
|
Oct
|
2
|
15
|
4
|
|
21
|
|
Nov
|
2
|
15
|
1
|
|
18
|
|
Dec
|
2
|
14
|
1
|
|
17
|
|
Jan
|
2
|
15
|
2
|
|
19
|
|
Feb
|
2
|
15
|
1
|
|
18
|
|
Mar
|
2
|
16
|
1
|
|
19
|
|
Apr
|
2
|
16.5
|
3
|
2.5
|
24
|
|
May
|
2
|
16.5
|
2
|
2.5
|
23
|
|
Jun
|
2
|
14
|
2
|
1
|
19
|
The
result: A sudden glut of sugar in the market, causing ex-factory prices in
Maharashtra
to dip from Rs.2,450 to Rs.2,050 a quintal within a fortnight. Retail prices
have also eased, even if not to the same extent. The Centre's move to release
additional sugar-apparently decided after a meeting convened by the Prime
Minister's Office last Wednesday- has clearly calmed the market at election
time.
But
what will happen once the poll season is over? At the current rate of monthly
releases, sugar consumption during the 2008-09 season will touch 240 lt. As
against this, mills are slated to produce only 150 lt, which, along with opening
stocks of 80 lt, translates into a total availability of 230 lt.
Import Option
"The
only way the present quantum of releases can be sustained is through imports.
Otherwise, you are going to see a spurt in prices after the elections as the
season will end with virtually no stocks", analysts pointed out. The Centre,
on its part, is hopeful of imports of roughly 35 lt taking place during 2008-09,
which includes 25 lt of raw sugar and 10 lt of whites by public sector trading
firms.
The
other question being asked is where is all the additional sugar that is being
released going to. This is more so, given the stockholding and turnover limits
imposed on traders by the Government.
"Obviously, it is getting absorbed by the
consumers, be it households, sweetmeat makers or soft drinks and organised
confectionary manufactures. Higher prices have seemingly not impacted
consumption. Rather, it is possible that the prospect of price increase has
encouraged consumers to stock up more than their usual requirement, "the
analysts added.
- Harish Damodaran
(The Hindu Business Line : 23.4.2009)
