The Hindu Business Line : Sugar industry ready to exploit Indian Ocean region: ISMA chief

The Centre's decision to permit sugar exports is in principle a welcome move. Though late, the decision to lift ban on exports is what the industry needs, according to Mr P. Rama Babu, President of Indian Sugar Mills Association.

The Centre and the industry now need to work together to explore options to export at least two million tonnes of sugar, he said.

Sugar production in the current season and the next is bound to be in surplus. In 2006-07, sugar production is expected at 23-24 million tonnes (mt) and in 2007-08 also it could be around similar levels against a domestic consumption of about 18-19 mt, he said.

India was well set to exploit the opportunities in the international market. Export restrictions were not the route to development. The industry had proved food security could be managed even during scarcity periods, he said.

In the previous seasons, scarcity was managed through imports of raw sugar. Similarly, the industry had been a competitive exporter. It had to be that way. "Highs and lows should be managed outside and not inside," Mr Rama Babu said.

Domestic conditions — a bumper sugarcane crop and heavy investments in expanding production capacities — and a shortfall in the international market, of about 4-5 mt, due to reduction in exports by the European Union, provide an opportunity for India in the long run.

The industry here was geared to exploit the markets in the Indian Ocean region, he added.

Little cheer

The announcement has certainly improved market sentiments. Share prices of sugar companies gained 8-9 per cent following the announcement. The confidence is certainly enhanced, he pointed out.

But for now, according to industry sources, sugar mills find little to cheer about the decision to lift the ban on sugar exports, though it is the right thing to do. The important thing now is to maintain a consistent policy, they said.

Though beneficial in the long run, for now the damage has been done. The Centre clamped down on exports when the prices were high last year and has chosen to permit exports when prices are down in the international market.

Under the existing circumstance, with sugar prices ruling low in the international markets the prospects for exports are minimal, according to industry representatives.

This would particularly hit the standalone sugar mills while the integrated facilities with cogeneration and ethanol production would have some cushion.

There is bound to be sugarcane arrears and some unhappy farmers this season, they said.

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