NEW DELHI: A series of steps are being taken by the government to curb retail food inflation. The Union food ministry on Thursday directed all sugar mills and distilleries to stop using sugarcane juice for the production of ethanol for the 2023-24 season, to ensure an adequate supply of sweetener for domestic consumption and prevent any hike in its retail prices.
This move is expected to release 1.8-2 million tonnes of sugar additionally in the domestic market which would help curb the rise in prices amidst reports of a fall in sweetener output in Maharashtra and Karnataka this season.
Sourced told FE that the government will also ban onion exports soon, in what would follow the ‘high’ minimum export price (MEP) of $ 800/tonne imposed in October.
The food ministry in a communication to managing directors and chief executive officers of all sugar mills and distilleries, said that supply of ethanol to oil marketing companies from B-heavy molasses will continue.
Industry sources said with the new restriction only 1.5 MT instead of 3.5 MT as per the earlier projection out of the total sugar production 33 MT of sugar for the 2023-24 season will be available for ethanol production.
This is likely to hit the country’s ethanol blending programme as earlier the government had stopped the use of broken rice from the Food Corporation of India (FCI) for biofuel production.
According to the India Sugar Mills Association (ISMA), the ethanol blending in petrol has more than doubled to about 11.76% currently against the blending of around 5% in 2019-20. Under the national policy on bio-fuels of 2018, the government had advanced the target of 20% blending of ethanol in petrol to 2025-26 from 2030.
“Sugar production of 31.5 MT will be available for domestic supplies in the current season,” Ravi Gupta, executive director, Shree Renuka Sugar, told FE. ISMA will state the implications of the measure on Friday.
The food ministry has projected domestic sugar consumption at around 27.5 MT for the current year.
Keeping into consideration the fall in sugar production, the government had earlier extended restrictions on sugar exports beyond October 31. India exported 6 MT of sugar in the last sugar season (October-September 2022-23), and a record 11 MT in the year before.
Retail inflation for the sugar and confectionary category rose by 5.83% in October from 4.73% in September on year. Sugar inflation last month was highest since March 2022 when sweetener prices rose by 6.03% on the year.
Meanwhile, sources said that the government is likely to impose a ban on exports as retail prices of key agricultural commodities have doubled to Rs 60/kg on Thursday from Rs 30/kg three months back. In October, to discourage exports and improve domestic supplies, the Government imposed a MEP of onion at $ 800/tonne. The move follows the imposition of a 40% export duty on onions in August.
Retail onion inflation rose by 42.08% on year in October as retail prices in several cities touched Rs 90/kg last month because of a delay in the arrival of kharif crops and reports of a decline in production in Maharashtra and Karnataka.
The food ministry has decided to offer 0.4 MT grain weekly under the open market sale scheme (OMSS) from the FCI stock instead of the current practice of 0.3 MT to bulk buyers from December 20.
To improve domestic supplies, FCI has sold 4.46 MT of wheat this fiscal in the open market so far and on Wednesday the corporation sold 0.28 MT at an average price of Rs 2301/quintal on Wednesday against the Minimum Support Price of Rs 2275/quintal for the 2024-25 marketing season (April-June)
At present, wheat stock with FCI is 18.98 MT against the buffer of 13.8 MT for January 1. The government is aiming to sell 10 MT of wheat through OMSS till March 31, 2024, to boost domestic supplies.
Source: The Financial Express
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