Agri Business

Change in quality standards brighten prospects of sugar exports to Indonesia

Bloomberg New Delhi | Updated on February 19, 2020 Published on February 19, 2020

Indonesia changed the colour specification for raw sugar imports to allow shipments from India

 

Indian sugar millers, saddled with record stockpiles, are eager to cash in on the prospect of resuming exports to Indonesia after being absent from the world’s top import market for years.

The nation, which vies with Brazil as the top producer, may sell 250,000 tonnes of raw sugar to Indonesia by the end of the local crushing period in May after a change in quality rules by the Southeast Asian country, according to the median of six estimates in a Bloomberg survey of traders and officials.

India is returning to Indonesia after a severe drought cut production in Thailand, usually the leading supplier of raw sugar to the country. The new export market may help rein in India’s ballooning reserves, which surged to a record of more than 14 million tonnes on October 1 after bumper harvests.

This is a golden opportunity for us to export sugar to Indonesia, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd., a producers group. Mills just need to shut white sugar production and start making raw’s in the next two months before the crushing season gets over.

Indonesia changed the colour specification for raw sugar imports to allow shipments from India, Kasdi Subagyono, director-general of estate crops at the Agriculture Ministry said Monday. The government halved the ICUMSA measure to 600, Subagyono said, adding Indonesia needs sugar to meet rising household consumption. While targeted at India, the lower level applies to all suppliers.

The ICUMSA is the International Commission for Uniform Methods of Sugar Analysis. Most Indian mills make raw sugar with an ICUMSA of as much as 800. They could not ship to Indonesia, which had a level for imported sugar of 1,200.

Global Prices

Increasing exports from India may curb the rise in global prices that have surged about 10% this year on concern about production in No. 2 exporter Thailand, hit with its worst drought in 40 years. Sugar exports from the country could drop about 40% to 6 million tonnes, according to one industry estimate.

Export contracts have to be signed quickly for mills in Maharashtra and Karnataka to produce raw sugar before crushing ends in about a month, said Abinash Verma, director-general of Indian Sugar Mills Association.

The U.S. Department of Agriculture estimates that Indonesia, the world’s biggest importer of the sweetener, will buy 4.4 million tonnes of raw sugar in 2019-20.

Indonesian refiners are waiting for an official notification on the ICUMSA rule before entering import contracts with Indian suppliers, said Bernardi Dharmawan, chairman of the Indonesia Sugar Refiners Association, a group of 11 refiners that only process imported raw sugar for industrial users.

Indonesia may buy 300,000 tonnes from India this year, considering inadequate supplies from Thailand, he said, adding actual purchases depend on prices.

Published on February 19, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.