Sugar mills face quota cuts for exceeding sales limits

In a move promoting fair play within India’s sugar industry, the Department of Food & Public Distribution (DFPD) has announced quota reductions for 106 sugar mills in July 2024.

In an order issued on June 28 by the Department of Food and Public Distribution allocating 24 lakh tonnes (lt) of sugar among 573 mills for sales in the domestic market during July, the Government said, “It has been observed that some of sugar mills have violated the stockholding limits and sold the sugar in excess to their release quota for the month of April, 2024. Therefore, in exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1955 (10 of 1955) read with clause 4 and 5 of the Sugar (Control) Order, 1966 and Order of the Government of India, Department of Food & Public Distribution vide S.O. No.2347 (E) dated 07-06-2018, it has been decided to deduct the quantity so dispatched in excess to release quota of April-2024, from eligible quota for the month of July-2024.”

Ensuring a Level Playing Field

Implemented in June 2018, the Monthly Release Mechanism assigns monthly sales quotas to each sugar mill. This system fosters a fair market by preventing larger players from dominating the market and ensures price stability for consumers. Key objectives of the Monthly Release Mechanism include:

Equal Market Access: Guarantees all sugar mills have a equal opportunity for selling according quota.

Price Stability: Monthly Release Mechanism regulates the amount of sugar available for sale each month to prevent price fluctuations.

Positive Long-Term Impact

Industry experts anticipate positive long-term effects from this strict enforcement. “Mills abiding by the rules will finally have their fair share of the market,” said a Co-operative Sugar Mill’s Managing Director. This translates to more stable sugar prices for consumers in the long run.

Mixed Reactions, Clear Message

While some industry members view the move as harsh, major sugar mills have largely welcomed the action. The DFPD remains committed to close monitoring and similar actions against future quota violators. As the effects of the quota reduction unfold, the sugar market will be closely watched in the coming months. The government’s message is clear: fairness and adherence to regulations are paramount in India’s sugar industry.

Disclaimer: The views and opinions expressed in the article by Dilip Patil, Managing Director of Samarth SSK Ltd., are solely his own.


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