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Agri-Biz & Commodities - Sugar


No Govt control over hoarding sugar

Harish Damodaran

New Delhi , April 25

WHILE the Government can employ the release mechanism to force mills to sell adequate quantities of sugar in the open market, there is no corresponding weapon in its hands now to prevent hoarding or accumulation of stocks by dealers.

This was not the case though, till less than three years ago, when sugar could be stocked only by recognised or licensed dealers. Further, as per a Food Ministry notification, G.S.R 449 (E), dated October 1, 1996, no recognised dealer could, at any point of time, hold sugar stocks in excess of 1,000 quintals, with this limit being fixed higher at 5,000 tonnes for sugar imported into West Bengal (as it was a perennially deficit State).

Also, there was a prescribed stock turnover period of 30 days, with the notification directing that ``no recognised dealers shall hold any stock of vacuum pan sugar or khandasari (open pan sugar) for a period exceeding thirty days from the date of receipt by him of such stock.''

But with the industry facing a burden of burgeoning stocks and sugar prices taking a dip, it was decided to do away with these regulations on the trade. In a subsequent order, S.O. 803 (E), dated August 20, 2001, the Ministry rescinded the October 1, 1996 notification, with immediate effect. This was followed by another order G.S.R. 104 (E), dated February 15, 2002, giving effect to a Cabinet decision to do away with licensing requirements for trading in not just sugar but also foodgrains and edible oils.

With the coming into effect of the Removal of (Licensing requirements, Stock limits and Movement Restrictions) on Specified Foodstuffs Order, 2002, ``any dealer may freely buy, stock, sell, transport, distribute, dispose, acquire, use or consumer any quantity of wheat, paddy/rice, coarse grains, sugar, edible oilseeds and edible oils and shall not require a permit or licence there for under any order issued under the Essential Commodities Act, 1955.''

Simultaneously, the definition of `dealer' was made flexible enough to mean ``any person engaged in the business or purchase, movement, sale, supply, distribution or storage for sale of any of the commodities specified in clause 3 of this Order, directly or otherwise, whether as a wholesaler or retailer and whether or not in conjunction with any other business and his representative or agent.''

The sum and substance of all this is that hoarding sugar (or even grains and edible oils) today is not an offence and the Government cannot legally force the trade to de-hoard, even while it can `release' additional free sale or levy sugar quotas to mills. Worse, any move to re-introduce the provisions of the October 1, 1996 order now would invite flak — both from the Election Commission and from those advocating free trade in commodities.

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