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Sugar exports to cross 5 MT this year

IBEF:  February 21, 2020

India’s sugar exports are estimated to cross 5 million tonne (mt) in the current marketing year ending September. According to industry body Indian Sugar Mills Association (ISMA), this is on the back of increased global demand because of a production deficit of 8-9 mt.

Though, this is still behind the 6 mt sugar exports target set by the government under the Maximum Admissible Export Quota (MAEQ) to help deal with the glut in sugar production in the 2018-19 marketing year. In the last sugar season, India had exported 3.8 mt against the mandatory quota of 5 mt.

ISMA, quoting analysts said the global sugar prices have increased by 20-25 per cent in the last three months, making it profitable for Indian sugar firms that are striking up new export deals. The sugar mills that have followed the government policy of exporting 25 per cent of their prescribed quota in October-December 2019 quarter are expected to be benefited by this increased sugar prices.

According to an official notification issued in January, the firms that did not meet the quota requirement may have to forfeit 20 per cent of the MAEQ, which will be reallocated to those who fulfilled it. Although, it is not clear that how many firms have fallen short of this requirement and how much of sugar exports redistributed among other sugar mills.

“Apart from the difficult situation faced by many mills in Maharashtra and Karnataka during the monsoon floods last year and the pending export subsidy of Rs 2,000 crore (US$ 286.16 million) from the government made it difficult for many sugar companies to meet the target,” said an industry representative.

According to the market reports by ISMA, around 1.6 mt sugar has been exported so far and contracts have been signed for exporting an additional 3.2 mt.

Till February 15,2020, sugar produced in the country by the sugar mills stood at 17 mt, nearly 23 per cent lower than the 22 mt sugar produced in the corresponding period of the previous sugar season.

Indian mills are expecting better prices for their exports as the prices of raw and white sugar are 20 to 25 per cent higher in the global market than three months ago. According to analysts, there is eight to nine million tonne shortfall in global production of sugar in the current sugar season.

The production of sugar by mills in Uttar Pradesh stood at 6.6 mt, compared with 6.4 mt last year whereas their counterparts in Maharashtra produced 4.3 mt, as against 8.3 mt in the same period last year. The contribution of Karnataka mills’ contribution so far was 3.1 mt as against 3.9 mt a year ago.

Mills in other States such as Tamil Nadu, Gujarat, Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Madhya Pradesh and Punjab contributed the rest.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.