Sugar factories object to low levy purchase price.

KOLHAPUR: Representatives of sugar factories have objected to the state government decision to buy the levy quota of sugar at Rs 2,768.20 a quintal though the wholesale sugar price in the domestic market is hovering around Rs 3,100 per quintal.

Officials at the Maharashtra State Federation of Cooperative Sugar Factories, the apex body of sugar factories in the state, said that there is significant difference between levy sugar purchase price and the market price and it would affect their profit margin. The levy sugar is distributed through fair price shops. Sources in the government said the purchase rate of sugar for levy is based on daily market prices in the last week of March.

"The sugar factories have already faced financial crisis in the last season because of sugarcane shortage. The international prices of sugar have remained stable for almost one year, thereby, restricting sugar export. Export was an assured source of higher income, but as it reduced, the domestic stock of sugar continued to surge with beginning of the crushing season 2013-14."

The pressure of excess sugar stock further mounted because of the lower response from the international market. Meanwhile, the union government sanctioned a package of Rs 6,600 crore to sugar factories, where interest free loan was offered, which can be repaid in next few years. The package came as a relief and many factories could make payments to farmers for the sugarcane purchase, said the sources.

Till February this year, the sugar prices in last 18 months have remained less than Rs 3,000 per quintal. It led to slow release of sugar in the market. The demand for sugar increased in the summer season generally from the beverage makers and confectionaries. The wholesale price is currently hovering around Rs 3,100 per quintal. The state government had recently issued a directive to purchase the levy sugar, which is 10% of the total stock at every sugar factory that is a member of the state federation. But the members of the Federation have written that they do not want to sell sugar at less than Rs 3,000 per quintal.

Source : timesofindia.indiatimes.com