The Centre has decided to allow export of an additional five lakh tonnes (lt) on sugar under open general license (OGL) for the current 2010-11 season (October-September).

This is over and above the already permitted 10 lt, cleared through two equal installments on April 19 and June 28. The go-ahead for export of an additional five lt quantity was given at a meeting of the Empowered Group of Ministers (EGoM) under the Finance Minister, Mr Pranab Mukherjee here on Friday.

The latest move would benefit sugar mills, given that realisations from exports are way above that from domestic sales. Ex-factory prices are currently ruling at around Rs 25,500 a tonne in Maharashtra, Rs 26,500 a tonne in Tamil Nadu and Rs 28,500 in Uttar Pradesh.

As against this, Indian sugar of equivalent 100-ICUMSA quality is currently fetching roughly $ 740 or Rs 33,600 a tonne. After deducting Rs 2,000 or so towards freight and port handling changes, mills in Maharashtra would stand to realise at least Rs 6/kg more from exports compared with sales in the domestic market. Alternatively, they could sell their sugar to exporters at a premium to the domestic price.

Globally, sugar prices are now on a roll, underpinned by successive downward revisions in Brazil's production for 2011-12 (April-March), from the initially estimated 34.6 million tonnes (mt) to 32.38 mt in July and the latest figure of 31.57 mt. In 2010-11, Brazil's sugar output amounted to 33.5 mt.

The decision to allow an extra five lt of exports by the EGoM was taken at the behest of the Union Agriculture Minister, Mr Sharad Pawar, in the face of opposition from his counterpart in Food and Consumer Affairs, Prof K.V. Thomas.

The Food Ministry apparently sought deferring any decision on further exports till end-September, by which time the peak festival season would be over and also a clearer picture of the 2011-12 crop may emerge.

It, however, succeeded in preventing a decision on lifting stock-holding and turnover limits on sugar dealers. These limits, effective since March 2009, restrict holding of sugar stocks by traders to a maximum of 200 tonnes, besides making it compulsory to rotate their stocks every 30 days.

Besides permitting five lt of additional exports under OGL, the EGoM also took a decision to reduce the minimum export price (MEP) for three premium non-basmati rice varieties, Sona Masuri, Ponni Samba and Matta, from $ 850 to $ 600 a tonne.

The Centre had, in March, permitted export of 150,000 tonnes of these three rice varieties, while fixing the MEP at $ 850 a tonne. “Since not even a third of this quantity has actually been shipped out, the EGoM has now asked the Commerce Ministry to notify a lower MEP,” official sources said.

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