“It has been observed that a few sugar mills are not following the monthly stock holding limit and they are selling either higher or significantly lower quantity from their monthly quota. Deviation from the monthly stock limit by sugar mills would distort the domestic sugar market and may result in accumulation of cane price arrears of farmers,” a notification issued by the food and public distribution ministry on Thursday said.

Ex-mill sugar prices across India have risen 6.5% since mid-March and about 4% in the last one year. But prices have been stable for a week now, hovering at ₹3,510-3,700 a quintal in the key cane growing states of Maharashtra, Uttar Pradesh, Karnataka, Gujarat and Tamil Nadu, spot trade sources said.

“Each sugar mill is expected to sell at least 90% of the monthly quota allocated in the respective month,” the notification read.

Some experts said the government has taken the measure to signal the market to behave. Otherwise, it is well-equipped to take measures if prices pick up.

A few experts said the move will benefit sugar mills that are unable to exhaust monthly sales quota for different reasons, including influential mills selling beyond their quota. “The mandatory minimum sales of 90% of the monthly quota will help mills that fail to exhaust their monthly quota owing to other mills selling beyond their quota allocation to increase their sales,” a Delhi-based sugar market analyst said, requesting anonymity.

The government imposed stock holding limits on sugar mills in 2018 to balance demand and supply. It allocates a monthly sales quota for each sugar mill after calculating domestic consumption, which is about 2.25-2.3 million tonnes on average a month.

Updated: 10 Aug 2023, 11:46 PM IST