The Central Government has issued a major clarification regarding the recent rise in the prices of sugar in the retail and wholesale markets of the country. The Ministry of Consumer Affairs and Food has completely rejected the claims that sugar prices in the domestic market have increased due to diversion of sugarcane juice and molasses (B-Heavy Molasses) for ethanol production. The government has clarified that the real reason for the price increase in the market is the decline in sugarcane production in some major producing states and artificial hoarding by some traders.
Government's blunt clarification on ethanol blending policy
According to senior ministry officials, domestic food security and sugar needs are always given top priority while meeting the national biofuel policy and the target of 20% ethanol blending (E20) in petrol.
The government accurately estimates the country's total consumption at the beginning of the sugar season and only after ensuring the buffer stock, the additional sugarcane or molasses is allocated for ethanol manufacturing. Therefore blaming the ethanol program for sugar inflation is completely factually incorrect and baseless.
Production decline and seasonality
The main reason behind the movement in sugar prices is low recovery of sugarcane and reduction in area due to irregular monsoon and drought-like conditions in major sugarcane producing states, especially Maharashtra and parts of Karnataka.
Due to this decline in production figures, a psychological pressure was created in the market regarding the supply cycle, which was taken advantage of by middlemen and big stockists. However, due to balanced production in states like Uttar Pradesh, the total availability in the country remains at normal levels.
Center's strict stance on hoarding and betting
The government has given clear indications that it is keeping a close watch on undue hoarding and speculation by some elements during the festive and demanding season. The Department of Food and Public Distribution has directed all state governments to regularly monitor the stocks of sugar mills, wholesalers and large retailers.
If any trader or institution is found violating the prescribed stock limits or tries to profiteer by creating artificial shortage, then strict punitive action will be taken against them under the Essential Commodities Act.
Adequate buffer stock, no need to panic
The Food Ministry has assured consumers and industries that there is sufficient stock of sugar in the country for domestic consumption. The government has a complete system to control the supply in the market through the Monthly Release Quota mechanism. If needed, prices will be immediately controlled by releasing additional quota, so that there is no additional burden on the kitchen budget of the general public.