Sugar sector divided over impact of capping exports

The sugar sector appears to be divided over the impact of the government capping the exports at 10 million tonnes for the current season.

ISMA welcomes move

Aditya Jhunjhunwala, President, Indian Sugar Mills Association (ISMA), the apex trade body, said the industry welcomes the Government move to cap exports at 10 million tonnes.

“The sugar industry had requested the Government to allow sugar export of about 9.5 million tonnes in the current season. As per the government notification, sugar export is capped at 10 million tonnes. The expected sugar exports of 9.5-10 million tonnes in the current season would be the highest that the country has achieved so far. This will be beneficial to all stakeholders - cane farmers and sugar industry,” Jhunjhunwala said.

However, sugar industry players in Maharashtra, who carry out bulk of the exports, are concerned over the government move. “The government decision will have an immediate impact on sugar prices. Already the Maharashtra government is supporting mills to crush extra sugarcane by providing grants. Now, we are not sure what the sugar mills are going to do with huge stocks” said one of the industry payers.

Sources said till last week over 85 lakh tonnes of contracts for export of sugar have already been entered and about 71 lakh tonnes of sugar have been physically shipped out till April end.

Short of expectations

The sugar industry in Maharashtra was looking for more export of sugar from the State, considering the massive production this season due to the glut in sugarcane. One of the mill directors said that if market prices of sugar come down, the mills will not be able to pay full FRP to farmers.

Till last week, 69 sugar mills in Maharashtra were still crushing sugarcane. As per the ISMA data, Maharashtra has left Uttar Pradesh much behind in sugar production. This season Maharashtra mills have produced 146.72 lakh tonnes of sugarcane (till May 15) while Uttar Pradesh mills have produced 113.95 lakh tonnes.

Vijay Kalantri, Chairman, MVIRDC World Trade Centre Mumbai, a trade facilitating body said, ”It is welcome that in the interest of domestic availability, the government has introduced mandatory approval process for export of sugar, instead of imposing blanket ban on exports.”

In recent years, India sharply improved its sugar export performance; from being the 10th largest exporter. in 2017 to becoming the second largest exporter of sugar after Brazil.

“Any blanket ban on sugar exports by India would have raised world sugar prices and it would have also hurt India’s image as a reliable supplier of agri commodities. Today, sugar and sugar products contribute 10 per cent to India’s agro export earnings and hence the move to regulate sugar export is sensible, instead of imposing blanket ban” Kalantri said.

Mohit Nigam, Head - PMS, Hem Securities said to control domestic inflation and steer more sugarcane into ethanol production, the Centre has placed a 10-million-tonne limit on sugar exports this season, despite record overseas sales. This is the first time India has done so in six years with sugar exports.

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