NEW DELHI: Packaged sugar now costs Rs 46 a kilogram in the retail market and there are no signs of prices levelling off. With loose sugar also costing Rs 43-44 a kg, the poly-packed product is inexorably moving towards the Rs 50 a kg mark, with the government appearing helpless in containing the spiralling prices.
The steady rise in sugar prices since the second half of last year is a consequence of shortfall in production being further aggravated by the Christmas-New Year season. The current stocks of sugar with the government are just about adequate to cover a month-to-month requirement, primarily for PDS users.
There are no extra stocks that can be released to stabilize prices.
Official sources said the government was so far disinclined to import sugar even though private parties were free to do so. When the government decided not to import rice, which is a staple, there was no case for sugar, said sources, indicating that consumers may have to live with high prices. The high prices in the international market are a deterrent as apart from crop failure in India, sugarcane has failed in Brazil too. While India was hit by drought, Brazil suffered from excess rainfall.
The reduction of import duties to zero has not helped as price of the landed product is higher than the current retail rates. Paradoxically, it is only when retail rates rise further that there will be an economic rationale for retailers and stockists to import sugar. The government has no plans to do so itself and then release it at a controlled rate. So far it seems that people will have to grin and bear it, said an official.
The situation seems fairly irretrievable as exports of sugar were allowed till quite late last year and the reduced sowing area as well as lower productivity hit the kharif crop badly. Inflationary expectations and hoarding have not helped matters even though government has taken a few measures like deferring export obligations with regard to imported raw sugar, a decision that the Cabinet took recently. It has also imposed stock limits on bulk users like soft drinks and confectionary companies.
Some experts have suggested that the government take up measures like setting up special retail counters in districts for sale of sugar, wheat and rice apart from the PDS network. Though there is a genuine shortage in sugar production, wheat availability is adequate but its price is still rising. With the government's bid to put out some of its wheat and rice stocks through auctions drawing a poor response, it is being felt that direct sales could be an option.
Sugar prices rose to Rs 4,150 a quintal in the wholesale market on increased buying for the New Year and marriage season amid a widening demand-supply gap. Sugar demand may increase even as traders at the Delhi wholesale market said prices were bound to go up. They said sugar was trading at Rs 4,150-4,250 a quintal in bulk against Rs 3,590-3,700 a quintal on December 19.
Sugar medium and small grade prices jumped further by Rs 100 each to Rs 4,150-4,250 and Rs 4,140-4,240 a quintal respectively. It had gained Rs 200 in the previous session. Sugar production from domestic sugarcane is pegged at 16 million tonnes, while annual demand is 23 million tonnes. Mill delivery medium and second grade also moved up by Rs 50 each to Rs 4,100-4,200 and Rs 4,090-4,190 per quintal.
Source : TOI