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As the global sugar market awaits the Indian government’s policy on sugar exports, millers are unwilling to export the produce without subsidy even as the international market rates make export affordable at this time.
Sugar traders point out that October 2019 sugar price in the international market was ₹1,900- 1,950 per quintal. This year, it is priced at ₹2,650-2,750 per quintal.
“Sugar mills can easily afford to export sugar at the current international market rate. The current MSP of sugar stands at ₹3,100 per quintal but sugar mills are selling sugar at a lower price. Many mills are not getting much benefit even after selling sugar at MSP rate owing to the loan interests they have to pay,” sugar exporter Abhijeet Ghorpade told BusinessLine .
One of the sugar exporters, on the condition of anonymity, said: “At some point of time, the sugar industry has to stand on its own and compete in the world market. It cannot ask for crutches every season.”. He added that the problem of surplus sugar could be solved only with maximum export.
Last year, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, gave its approval for providing a lump-sum export subsidy at ₹10,448 per Metric Tonne (MT) to sugar mills for 2019-20. The total estimated expenditure was pegged at ₹6,268 crore. .
Indian Sugar Mills Association (ISMA) said that sugar availability in the last three years (2017-18 to 2019-20) of 364, 439 and 420 LT, respectively was very high against the domestic requirement of around 255 LT. Also, availability is expected to be high this season.
“If India is a structural surplus sugar producer, it needs to export regularly. High cane prices make Indian sugar uncompetitive, and always dependent on government subsidies on exports. With export subsidies not possible after 2023 (as per WTO), Indian cane pricing policy needs reforms urgently,” ISMA stated in its presentation made to Commission for Agricultural Costs and Prices (CACP) last month.
Brazil, Australia and Guatemala have complained against Indian sugar and sugarcane policies in WTO. To export surplus sugar, Indian sugar has to become globally competitive and for that, sugarcane pricing has to be rationalized and made reasonable, ISMA insists.
The Cabinet Committee had finalised Fair and Remunerative Price (FRP) sugarcane for 2020-21 season at ₹285 per quintal for a basic recovery rate of 10 per cent and a premium of ₹2.85 per quintal for every 0.1 per cent increase above 10 per cent in the recovery.
High production cost
Mills have complained that they are not in a position to pay higher FRP due to increasing production cost and fluctuating market prices. “It is a fact that most of the sugar mills are not even in a position to start their crushing season.Sugar sector has to survive as it provides livelihood to lakhs of people and many farmers are dependent on it,” said Ganpatrao Sawant, director of Sangli-based Vasantdada sugar mill.
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