Eye on 2024, Centre moves to curb prices of onion & sugar
New Delhi: Unleashing more measures to check prices of food items and boost their availability in the domestic market, the government has decided to ban export of onion and stopped sugar mills and distilleries from using sugarcane juice or syrup for ethanol production for 2023- 24. Besides, the Centre is also expected to allow the Food Corporation of India to sell 4 lakh tonnes of wheat every week, against the current 3 lakh tonnes.
The move comes amid inflation moderating to a fourmonth low of just under 5% as food prices eased.
The latest set of steps coincide with the meeting of the monetary policy committee and indicate that in the run-up to the general elections, the government is unwilling to take any chances on the price front.
Earlier, the Centre had fixed the minimum export price (MEP) of $800 per tonne for onion to check the outbound shipment and had also put severe curbs on the export of sugar to ensure enough availability of the sweetener in the domestic market.
TOI has learnt that despite the imposition of MEP there has been export of more than 1 lakh tonnes of onion per month. Onion prices have been hovering around Rs 60 a kg due to less harvest of the kharif crop and depleting stock of rabi crop. Officials said in such a situation even the export of 1 lakh tonne can have a huge impact on the domestic prices.
Sources said the government went ahead with banning the use of sugarcane juice for ethanol with immediate effect considering the reduction in overall estimated production of sugar this year. Although the notification said that sugar mills and distilleries can continue “supply of ethanol from existing offers received by oil marketing companies from B-Heavy molasses”, industry insiders said this will also limit the diversion of sugar for ethanol production.
Industry sources said this move will result in increased availability of around 18-20 lakh tonnes of additional sugar in the domestic market, which would help curb rise in prices. As per the earlier plan, around 35 lakh tonnes of sugar diversion was projected for ethanol production, but now with the restrictions, only 15-18 lakh tonnes of sugar would be diverted for this purpose.
However, this is likely to impact the government’s ethanol blending programme, which is currently around 11.8%. Though government sources said there will be more focus on procurement of maize to meet the demand, sources said it’s economically unviable. Earlier, the government had stopped selling broken rice from the FCI stock to grain-based distilleries.
Uppal Shah, co-founder and CEO of AgriMandi.live Research said the government directive will ensure that there is sufficient sugar in the country to meet domestic consumption demand, in the light of lesser sugar production in the country. “Going forward it will be important to see how the ethanol blending target is met in the current season, with ethanol supplied mainly from B-Heavy molasses, broken rice and maize,” he said.
Meanwhile, Indian Sugar Mills Association was evaluating the government directive and would come out with its response soon. The association has projected a 8% fall in gross sugar production at 337 lakh tonnes for the 2023-24 marketing year starting (October-September) compared to last year’s 366 lakh tonnes.
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