Commodities

Container shortage acts as dampener for India’s sugar exports

Radheshyam Jadhav Pune | Updated on January 21, 2021

With the prediction of higher output, mills are in a hurry to export maximum sugar   -  Bloomberg

Lack of containers has put brakes to sugar exports from India, said exporters adding that with rising container movement in the US and China the number of containers available to Indian exporters are fewer.

Sugar mills and traders are also facing a shortage of trucks to transport sugar to the ports and within the country. With the prediction of excess sugar production this season, mills are in a hurry to export maximum sugar but lack of containers and trucks has posed a major problem.

According to sugar traders, in the last one month Maharashtra mills have signed contracts to export about 7 lakh tonnes (lt) of the sweetener. However, just 1.5 lt could be actually exported.

“Mills and exporters now face a challenge to fulfil the contracts instead of signing new export contracts. Majority of containers are stuck in China and the US. Only 40 per cent containers of the total requirement are available to Indian exporters. Not only sugar but even rice export is being hit because of lack of containers,” said sugar trader and exporter Abhijit Ghorpade.

Mills in dock

According to industry players, availability of truck will increase in the next few days once transport of rice and soya goes down.

Unavailability of containers affecting export could land sugar mills in more trouble. According to the Indian Sugar Mills Association (ISMA), 487 sugar mills are in operation in the country as on January 15. These mills have produced 142.70 lt of sugar, as compared to 108.94 lt produced by 440 sugar mills during the same period last year.

India exported 6.25 lt in 2017-18; 30 lt in 2018-19 and a record 57 lt in SY2019-20 helping the industry to trim down inventory and easing liquidity.

According to ISMA, about 3 lakh tonnes of sugar has been exported during October-December 2020, which is against the MAEQ of 2019-20 SS extended upto December 31, 2020. The government’s subsidy of ₹3,500 crore covers expenses on marketing costs including handling, upgrading and other processing costs and costs of international and internal transport and freight charges.

Sugar industry is worried that if transport charges go up, it would affect its profit margins.

Published on January 20, 2021

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