Taming Sugar Prices

The steep and sudden rise in sugar prices over recent weeks has understandably rattled households already grappling with a general cost-of-living squeeze. A marginal increase of two or three rupees is the kind of fluctuation consumers have learnt to absorb without much complaint. But an exponential spike, arriving just as the festive season approaches, is an altogether different matter - and one that rightly invited scrutiny. The Government's decision to move from a monthly to a fortnightly sugar allocation system, coupled with a mandatory dispatch window, is a welcome and overdue correction. At the heart of the problem lay a loophole that some mills appear to have exploited with quiet efficiency. Sugar allocated at the start of the month was, in several cases, not lifted by buyers until the tail end of it, creating an artificial squeeze in the interim even as stocks sat comfortably in warehouses. Physical verification drives by the Food Ministry have borne this out, revealing discrepancies between declared and actual stock levels at a number of mills. This was not a genuine shortage but a manufactured one, and the timing - coinciding with pre-festive demand - suggests hoarding and speculation rather than any real supply constraint.

The new fortnightly quota, requiring mills to sell at least 40 per cent of their allocation in the first week and the remainder in the second, closes much of this window for manipulation. Paired with the directive that sugar must leave the mill within seven days of sale, it tightens the entire chain from production to retail shelf. Bulk consumers, too, have been told not to sit on stocks beyond their genuine operational needs, further narrowing the scope for speculative hoarding.

These domestic measures are usefully reinforced by external ones. The decision to permit imports of ten lakh tonnes of raw sugar by the end of October adds a cushion of supply precisely when festive demand is expected to peak. Encouragingly, ex-mill prices have already softened by roughly a fifth, and retail prices are expected to follow in due course. Yet policing supply chains can only go so far. The more durable answer lies in expanding domestic sugar manufacturing capacity so that markets are less vulnerable to the whims of a handful of large holders in the first place. Investment in crushing capacity, better cane-yield support for farmers, and diversified sourcing would leave hoarders with far less room to manoeuvre.