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Kohinoor Mandal

However, there are a few hitches in the way of initiating raw sugar exports.

Kolkata , Aug. 8

LEADERS of the sugar industry are seriously considering starting export of raw sugar to get out of the vicious circle of increasing stocks and rising production levels.

According to industry sources, several committees have been formed within the Indian Sugar Mills Association (ISMA) to study all aspects of raw sugar exports. The committees are expected to submit their report soon.

"Though it is too early to predict the result of initiatives taken by ISMA, still we are targeting raw sugar exports of around 15-20 lakh tonnes in 2004," a leading member of ISMA told Business Line.

When asked whether industry could export raw sugar during the current year, he said it was almost impossible as sugar production in the country was almost over. "Raw sugar production actually ends before production of white sugar begins. In other words, raw sugar is refined into white sugar," he said.

Globally, 85 per cent of the sugar trade takes place in raw sugar. Hence it is high time that India started exporting raw sugar as it has already established itself as a leading sugar producing nation.

"All sorts of facilities are available for raw sugar trading. It can be done on screen. The system is totally transparent. One can always trade in American dollars. Moreover, one can also hedge one's position in raw sugar exports," the ISMA member added.

However, there are a few hitches in the way of initiating raw sugar exports. First, most sugar mills will have to make a nominal capital investment to produce exportable raw sugar. For example, for a 5 unit crushing 5000 tonnes per day, investment will be a little less than Rs 1 crore.

"The sugar units are urging individual state governments for some form of assistance vis-à-vis this capital investment. It was learnt that Maharashtra and Karnataka Governments may extend support for this purpose," sources said.

Meanwhile, Mr Vivek Saraogi, Managing Director of Balrampur Chini Mills Ltd, has urged the Union Government to give a cash subsidy of $25 per tonne for promoting raw sugar export.

According to him, the price difference between white sugar and raw sugar in export market is approximately $50 per tonne as white sugar is quoted at $205 per tonne (FOB) and raw sugar at $150-155 per tonne (f.o.b). The difference in the production cost is only $15 per tonne. So, the shortfall is $35 per tonne.

"Out of a shortfall of $35 per tonne we are only asking for a cash subsidy of $25 tonne. We have checked it out. This sort of a cash subsidy to the farm sector is totally compatible with WTO rules and regulations. The European Union gives a total subsidy of $36 billion to the farm sector," he said.

The second hurdle is logistics. Some of the leading players feel that there is hardly any infrastructure available at the ports to export raw sugar.

"Logistics necessary for exporting raw sugar is different from exporting white sugar, but surely the associated investment can be made in the national interest," a sugar expert said.

The common view is that raw sugar exports should be promoted to reduce the national sugar stock. In 2003 sugar production will be around 201 lakh tonnes against 198 lakh tonnes in 2002.

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