Sugar Prices Fall 20% As Centre Changes Quota System For Festive Supply

Sugar prices have declined by around 20 per cent at the ex-mill level in recent days, while retail prices have also started easing, following government measures to improve availability and curb hoarding ahead of the festive season. The Ministry of Consumer Affairs, Food & Public Distribution said on Friday that the recent rise in prices was driven largely by hoarding and speculation rather than an actual shortage.

The ministry said nationwide physical verification of sugar stocks found adequate supplies across the country. However, inspections also found instances where some sugar mills were holding stocks above the quantities declared in their monthly returns. Authorities also detected cases of “short selling”, where mills sold less sugar than their allocated monthly quota, potentially restricting market availability despite sufficient physical stocks.

To improve the movement of sugar, the government will replace the existing monthly quota system with fortnightly allocations from September. Under the revised mechanism, mills will have to sell at least 40 per cent of their allocation during the first week, with the remaining quantity to be sold in the following week. The system is intended to provide closer monitoring of demand and supply and allow quicker intervention when market conditions change.

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Sugar mills have also been directed to dispatch the commodity within seven days of sale. The measure is aimed at speeding up movement from mills to dealers and consumers while discouraging accumulation and speculative stockholding. Bulk consumers have additionally been advised not to maintain inventories beyond their operational requirements.

The government expects sugar availability to improve further with the beginning of the new sugar season. Sugarcane crushing is scheduled to start from October 15, with production expected to exceed 10 lakh tonnes in October and reach around 45 lakh tonnes in November. Mills have also been allowed to sell their October production without restriction to ensure supplies reach the domestic market early.

Additional sugar is already entering the market through refiners selling converted sugar under the Advance Authorisation Scheme, while dealers and bulk consumers are reportedly releasing excess stocks. The government has reiterated that there is no shortage of sugar and said the measures are intended to maintain adequate supplies at reasonable prices during the upcoming festive season.

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