"The stock holding limit for a month will be worked out on the basis of giving 100% weightage to the month-end notional stock of the preceding month," the Food Ministry said in a letter to all sugar mills. The notional month-end stock for a month would be calculated using the previous month's actual stock as reported, plus the sugar lifted from mills since November 1, 2022, and minus the actual release of the preceding month of the month for which the stock holding limit is being issued."
According to an official, the new methodology will be more effective once the data has been compiled using automated software for the first time. According to sources, the Food Ministry plans to launch a pilot next month on data generation at mill-gate via software, which will eventually be shifted to an API module connecting the factory's software so that real-time data are compiled from across the country.
For the time being, the plan is to have the mill manually enter the data within a set deadline. The Ministry also stated that mills will benefit from the release of monthly quotas for the domestic market based on how much their export figures are.
Incentives in lieu of sugar sacrificed for ethanol production would also be provided to mills. "The incentive for sugar diversion to ethanol production will be calculated as 1 tonne for 1 kilo-litre of ethanol produced from B-Heavy molasses and 1.67 tonne for 1 kilo-litre of ethanol produced from sugarcane juice and syrup," the official said.
He added that the formula will not be applicable for calculating sugar recovery. Mills want more quota in a bull market and less allocation in a bear market, according to an expert who praised the government's new methodology.
"At the very least, the mill will know how much material they will receive. Though there is no basis for assuming November-end stock for January quota, the cut-off date must exist in order for the new methodology to be implemented," he added.
