A surprise rush in sugar has come in terms of prices with the average sugar price in India has shot up by more than 15 per cent in a month to Rs 55.7 per kilogram on August 20.
The retail sugar prices have crossed Rs 60 per kg in Delhi, and according to government data, prices have climbed more than 20 per cent in a year.
The steep rise in the prices has led the government to allow duty-free imports of 1 million metric tons of raw sugar, a move coming after nearly 10 years.
Centre seeks to bring down record-high prices that have squeezed consumers, commerce ministry said.
According to the National Commodity and Derivatives Exchange Limited (NCDEX), in Kolhapur, one of India’s key sugar trade centres, wholesale sugar sold for Rs 5,750 per quintal.
What is leading to spike in sugar prices?
India is the largest consumer of sugar in the world. The country requires 270-297 LMT of sugar for the domestic market.
A fall in sugarcane harvests were reported due to the flooding in some states and poor rainfall in others, particularly in top sugarcane-producing states like Uttar Pradesh, Maharashtra and Karnataka.
This has led to hoarding and concerns over tight supplies, in turn increase in the sugar prices.
The government has said that the sugar production during the current season is expected to be around 306 lakh metric tonnes (LMT), compared to the initial estimate of around 343 LMT by sugarcane-growing states.
Union Minister Pralhad Joshi said the government was concerned over the decline in sugar production, attributing it to red rot disease and El Nino conditions that have affected agricultural output in India and globally.
He added that the government was taking several measures ahead of the festival season, including temporary imports of raw sugar, to address supply concerns.
No sugar shortage, prices likely to come down
Indian Sugar Mills Association president Niraj Shirgaoka on the crisis said India does not have sugar shortage and the recent surge in sugar prices is due to speculative stocking and lower production caused by weather related issues.
“India does not have a sugar shortage and the supply situation is fundamentally strong. Country has sufficient stocks and supplies to meet festival demand,” Shirgaokar said.