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Sugar exports beat lockdown blues, may touch 65 lakh tonne

In spite of the second wave of coronavirus infections, international prices of sugar have seen steady gains, mainly on the backdrop of crude prices.

Written by Parthasarathi Biswas | Pune |
Updated: May 20, 2021 10:19:17 am
Alvean Sugar SL, the world's largest sugar trader, projects the global supply deficit to nearly double in 2021/22 (Oct-Sept) from the previous year to up to 6 million tonnes, while it sees global sugar use growing 1.2% in 2021/22 from 0.7% in the previous season as countries further reopen after the pandemic. (File)

Increased demand from international markets has seen India’s sugar exports touch a new high. Till date, contracts of 59 lakh tonne have been signed, of which 43 lakh tonne have already been shipped out of the country.

Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Limited, said there are chances of the country exporting more than its quota of 60 lakh tonne, with some mills even taking to exporting sugar without taking advantage of the government subsidy.

At the start of the 2020-21 sugar season, the central government had announced a Rs 3,500 crore subsidy programme to ship out 60 lakh tonne of the sweetener. Aimed at reducing the sugar glut in the domestic market, mills could this subsidy after completing their quota. This will be the second year in running when the country has seen a subsidy programme for sugar exports to help the sector reduce inventory. This is also the second year in a row when India would be recording good exports. Last year, around 59 lakh tonne of sugar was exported.

In spite of the second wave of coronavirus infections, international prices of sugar have seen steady gains, mainly on the backdrop of crude prices. Brazil, the world leader in sugar production, had diverted a substantial portion of its cane crop towards production of ethanol, prompting a downward revision in its sugar production. Many markets traditionally cornered by Brazil have now turned towards India to meet their sugar needs.

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Naiknavare said the export basket had an equal share of raw and white sugar. Countries such as Indonesia and Afghanistan have been the top destinations for Indian sugar, while African countries have emerged as major markets for raw sugar.

At present, ex-mill realisation of exported sugar is around Rs 2,900/quintal and the subsidy amount is enough for mills to make a neat profit.

“A portion of white sugar is also being brought by Indian-origin refineries for middle-east markets,” said Naiknavare.

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What makes this season interesting is the willingness of mills to export sugar without the subsidy under what is called ‘open general licence’. “The present international prices are good enough for such exports, which would help mills reduce their inventory as well as save on bank interest,” said Naiknavare.

He said around 5 lakh tonne of the sweetener could be exported in this fashion. The National Federation has been urging its members to take advantage of the higher international prices. Asked about the subsidy amount pending with the government, Naiknavare said majority of the pending subsidy has been cleared, with around Rs 500 crore still pending. “That too will be cleared once the Finance Ministry transfers the funds,” he said.

The current year has been good for the sugar sector, with domestic sales also remaining healthy. Unlike previous forecasts of low sales due to the Covid-19 lockdown in April, sales have been good, especially from industrial buyers. “Last year, we had seen domestic consumption dropping to 250 lakh tonne but this year, we feel domestic consumption would be around 255 lakh tonne,” he said.

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In case the industry reports 65 lakh tonne of exports, the opening stock for the 2021-22 sugar season, which begins in October, will fall below 100 lakh tonne. After years of excess stock, this would be a welcome change for the industry as ex-mill prices are going to be good enough for mills to pay cane farmers on time.

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First published on: 19-05-2021 at 07:37:17 pm

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