Faced with the prospect of lower-than-expected production of sugar in the ongoing season due to drought, the government has imposed stock curbs on dealers to prevent speculation and hoarding, the food and consumer affairs ministry said today.

“With the objective of keeping the sugar prices at reasonable level and to ensure smooth supply of sugar for consumers, the Central Government has imposed stock holding and turn over limits on stockists and dealers of sugar. The Central Government has also authorized the State Governments and the Union territory Administrations to enforce this order to prevent speculative tendencies and hoarding activities,” it said today.

It also imposed a custom duty of 20% on sugar exports, but did not clarify when these curbs were introduced. Similar restrictions were imposed last year to control a rise in sugar prices.

The current move is in light of poor production of sugar in the season so far. The sugar season starts on Oct 1 and ends on Sep 30.

Sugar is produced primarily in two regions — Uttar Pradesh in the north and the Maharashtra-Karnataka region in the south.

Out of this, Maharashtra and Karnataka have been faced with less-than-expected water availability this season, the ministry said. This, it added, has affected production.

India produced 27.39 million tons of sugar in the 2014-15 season and 24.34 MT in the 2015-16 season.

The total demand for sugar in India this year is estimated at about 24.2 mln tons per year.

“After taking into account the first advance estimate of Department of Agriculture & Cooperation and on the basis of inputs received in the meeting of cane commissioners on 14.10.2016, the sugar production was initially estimated at 225.21 lakh (22.52 mln) tons. However, due to decrease of sugarcane production on account of drought in major sugar producing states like Maharashtra, Karnataka, etc and diversion of cane to other allied sectors like Gur, Khandsari, etc., the earlier estimates of sugar production may undergo downward revision,” the ministry said.

The impact has been felt largely on the southern producing regions.

As of Feb 19, production of sugar in Maharashtra’s mills was only 4.06 mln tons compared to 6.56 mln tons at the same time in the last season, the ministry said.

The ministry said it did not anticipate any scarcity of sugar in the country even if production falls short by a couple of million tons compared to the first estimate as it began the year with 7.7 mln of opening stocks.

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