Bulk Sugar : The government has rejected a request by biscuit and bread companies for more time to sell excess stock. The government has ordered them to sell their excess stock by August 31. The stock holding period was recently reduced from 30 days to 15 days. Under this, companies using large quantities of sugar are allowed to keep only 15 days of stock from their normal stock.
In a meeting with the food secretary, some of the country’s major companies warned that selling their stocks now and buying sugar from the market later could lead to a sharp rise in sugar prices. He also expressed concern over the difficulties he faces in fulfilling export orders due to shortage of supplies.
The companies denied the allegations
Trade officials say that if this stock returns to the market by August 31, it could bring down sugar prices significantly. The move follows allegations by the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) that major sugar-consuming companies are hoarding sugar. The companies have denied the allegations.
“We collect seasonal stock based on our production requirements, not for resale or speculation. I can prove that every kilogram of sugar we buy is converted into food items like biscuits or candies,” said a senior official of a listed biscuit-making company.
He further said, “We convert sugar into food items like biscuits, which are used by common people. If we sell our hedged sugar now, we will be back in the market in a period of 15 days, which could put upward pressure on prices.” Some FMCG companies are happy that this move by the government can reduce price volatility, as it is more harmful to their business than a constant increase in prices.
The government’s decision is correct
Parle chief marketing officer Mayank Shah said in an ET report, “We are maintaining stocks as per government norms. Our requirements are very high, so even if we wanted to, we cannot stock more sugar. Sugar prices have come down following the government’s move. This move will keep speculators in check. The industry hopes that if wholesale buyers comply with the stock limit, sugar prices may come down further. Sugar industry senior Analyst GK Sood said that if wholesale buyers sell stocks beyond the legal limit, we may have around 3-4 lakh tonnes of surplus sugar in the market.”
May have to face difficulties
Some analysts have said that MNC FMCG and pharmaceutical companies, which require certain grades of sugar from approved mills, may face difficulties in getting timely supply. Industry body ISMA has claimed that traders and big buyers have made speculative purchases, creating an artificial shortage of sugar in the market. Sood said it is against business ethics for a trade association to blame its customers. The raids on sugar traders in West Bengal have caused panic among the business community.
