Agri Business

Indian sugar exports face 3 challenges, says Food Secretary

Subramani Ra Mancombu Chennai | Updated on October 27, 2021

Indian exporters have been shipping sugar to Afghanistan on FOB basis and insisting on advance payments

‘Rebound in Thai output, Afghan instability and Lankan forex crisis will need new strategies’

Though sugar traders and industry have signed contracts to export 1.5 million tonnes (mt) of sugar this season (October 2021-September 2022), the Indian sugar sector faces three challenges on the shipments front.

“More contracts for sugar exports are coming. But there are challenges on the way. One, production in Thailand is higher. Two, there is instability in Afghanistan and it is likely to affect India’s exports. Third, Sri Lanka is facing a shortage of foreign exchange,” said Sudhanshu Pandey, Secretary, Food and Public Distribution.

The sugar industry has to think of new ways to overcome these issues, particularly the Sri Lanka foreign exchange crisis. “Last year (season), India exported 7.2 million tonnes of sugar. Fifty per cent of this went to three countries - Indonesia, Afghanistan and Sri Lanka,” he said, addressing an international webinar “Global sugar: Brazil loss - Will India fill the gap?”

Stating that 50 million farmers were dependent on the sugar industry, the Secretary said domestic consumption of the sweetener became static during the Covid pandemic. “Consumption was affected as business establishments were shut, and the sugar industry faced problems. The Government redefined the sugar industry’s problem,” he said.

Diversion for ethanol

One of the policies formulated by the Centre was to encourage more diversion of sugar for the production of ethanol. According to Pandey, 2.5 mt of sugar production was diverted for ethanol production. “This year, 3.5 mt of sugar production will be diverted for ethanol output and the target for 2023 is to divert six mt of production for ethanol,” he said.

Stating that farmers’ interest is vital for all stakeholders, Pandey said sugar recovery from cane will likely increase in the coming years without raising the area under cultivation. “Farmers are planting better varieties and following better techniques. This will help increase production without raising the area,” he said.

The Food Secretary said Covid, climate change and conflict were disrupting supply chains, but India can to maintain its status in the sugar sector.

Exports outlook

Earlier, Subodh Kumar Singh, Joint Secretary, Food and Public Distribution, said India mills would export six to seven mt of sugar this season without any help from the Centre. Over the last two seasons, the sector was assisted with shipments that helped Indian sugar compete against other nations such as Brazil in the global market.

Indian sugar crop has been good over the last ten years, except 2016-17, resulting in the country becoming a structurally surplus in sugar. Even without assistance, 1.5 mt of sugar had been contracted for exports, and this year traders began signing for shipments well before the season started. Last season, export demand came only in January, he said.

“If India can export six mt, domestic sugar prices will stabilise, while local consumption is expected to increase. There should be no problem in exporting but India needs to find new destinations in West Asia and East Africa to export such as the ones where Brazil would not be able to supply this year,” Singh said.

Published on October 27, 2021

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