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R. Balaji
M. Ramesh

Domestic prices down by 6%; Export prices buoyant

Chennai , Aug. 22

Tamil Nadu has been hard hit by the ban on sugar exports as sugar prices have dropped more steeply here than in other markets.

Sugar exports need to be restored in the interest of the farmers and the sugar mills, according to industry representatives.

In 2005-06, sugar production in Tamil Nadu is over 20 lakh tonnes, which is double that of local consumption. The State traditionally sells sugar to other markets — either the neighbouring States or other countries. It is ideally suited to reaching the markets in the South-East.

Price Drops

But with the sugar production buoyant in other States also, Tamil Nadu's options are limited. Following the ban on sugar exports, prices in Tamil Nadu dropped to Rs 16.50 a kg, a 6 per cent drop, as compared to just 3 per cent in other States.

Though domestic prices were down, export prices were buoyant and sugar mills could sell at Rs 19 in the export market if not for the ban, they said.

Also, Tamil Nadu has imported over 8.2 lakh tonnes of raw sugar and has commitments to export white sugar under the advance licensing scheme.

Sugar mills in India are committed to export about 15-20 lakh tonnes under the scheme. Out of this quantity, Tamil Nadu mills would be able to export about 10 lakh tonnes.

Losses

Due to the drop in domestic prices, sugar mills were losing about Rs 14-15 crore a month directly because of the ban, they said. Farmers too are affected. Sugar mills share profits with farmers under the additional pricing mechanism for sugarcane. Revenues over the base price are shared with farmers as additional price for sugarcane. With the new season coming up and bumper harvest expected, sugar mills may have to revert to delayed sugarcane payment to farmers.

During the coming season, industry estimates peg sugarcane arrivals at 20-25 per cent over the arrivals of the previous season. In 2005-06, Tamil Nadu mills have crushed more than 200 lakh tonnes and some private mills are continuing to crush sugarcane. If the sugar mills' revenues were affected then the payments to farmers also could be affected, they say.

More Stories on : Agricultural Policy | Sugar | Tamil Nadu

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