Sugar prices have fallen sharply at mill gates over the past two weeks, but the decline is yet to fully reach consumers, with retail prices falling only around 4% even as ex-mill rates have dropped more than 23%.
Average ex-mill sugar prices, which were above ₹6,500 per quintal on August 20, have fallen to an all-India average of ₹4,800 per quintal as of September 3, according to trade sources. In contrast, the all-India average retail price has eased from a peak of around ₹65/kg to ₹62.23/kg—a decline of just 4.3%.
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The sharp fall in ex-mill prices comes after the government cracked down on hoarding and speculative trading, tightened dealer stock limits, opened imports for the first time in nearly a decade and moved to fortnightly sugar allocations to force faster release of stocks.
The gap is visible across markets. The Department of Consumer Affairs’ state-wise data shows sugar prices above the all-India average in 19 of the 35 listed state/UT markets (Lakshadweep is left out). Retail prices are ₹78.75/kg in Tripura, ₹74 in Manipur, ₹73.67 in Andaman and Nicobar Islands, ₹68 in Ladakh and ₹66.89 in Meghalaya, among others. The all-India maximum is ₹85/kg against an average of ₹62.23.
Industry reps expect price drop to gradually hit retail
Industry representatives, however, said retail prices should begin to fall as cheaper sugar moves through the supply chain. Praful Vithalani, chairman of the All India Sugar Trade Association, said retail prices typically reflect changes in ex-mill prices with a lag because traders and retailers may still be holding inventory bought at higher prices.
“In the beginning, when ex-mill prices had gone up, retail prices were low. The prices only reflect with a lag,” he said, adding that sugar has no easy substitute and consumers cannot readily switch to another product when prices rise.
According to Vithalani, with the all-India ex-mill price now averaging around ₹4,800 per quintal, retail sugar should eventually come down to around ₹56-57/kg.
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Another trade source said retail prices should fall over the next 10 days as higher-priced inventory gets exhausted.
G.K. Sood, chairman of KN Agri Ltd, said the normal difference between ex-mill and wholesale prices is around ₹2-3/kg, while the gap between ex-mill and retail is typically ₹8-9/kg after accounting for freight, GST, packaging and margins. At an ex-mill price of ₹48/kg, this would imply a normal retail price of roughly ₹56-57/kg, much below the current average of ₹62.23.
