Maharashtra mills eye exports to cash in on global sugar prices

Global prices are over Rs 3,100 as against the current ex-mill price of Rs 2,775/qtl

Sugar mills in Maharashtra are expecting a jump in exports on the back of a bumper crop and high global prices.

The estimated sugar output in the state is 9.5 million tonnes, despite crop damage due to unseasonal rain. Sugar prices in the global market are over Rs 3,100 a quintal as against the current ex-mill price of Rs 2,775 a quintal (without duty).

Agriculture and Food Minister Sharad Pawar had announced that 5,00,000 tonnes sugar would be exported under the open general licence (OGL). The government has notified OGL – a permit the government gives to mills to export sugar without restriction and conditions – for exports.

Industry representatives told Business Standard that among the 19 sugar producing states, the top two – Maharashtra and Uttar Pradesh – account for more than 72 per cent of the country’s production.

“Maharashtra is ideally positioned to benefit from exports on three counts: It has two big ports — the Mumbai Port and the Jawaharlal Nehru Port; it is also well connected by road and rail; and its sugar bowl, comprising Kolhapur, Sangli, Satara, Pune, Ahmadnagar and Solapur districts, that contribute more than 75 per cent to the state’s production, are about 250-300 km from these ports.”

Maharashtra is the leading producer of fresh sugar. Its net cumulative production this year is 2.7 million tonnes, despite unseasonal rain, workers’ strike and agitation by parties demanding a higher cane price.

“Thus, whichever pro rata formula the government decides for OGL exports, Maharashtra stands to gain due to its high sugar production,” he said.

According to a state agriculture department official, Maharashtra produced 9.06 million tonnes of the country’s total production of 26.2 million tonnes in 2007-08, 4.5 million tonnes out of the total production of 14.5 million tonnes in 2008-09 and seven million tonnes of India’s total 18.8 million tonnes in 2009-10. This year, the state is expected to produce 9.5 million tonnes out of the estimated national output of 25 million tonnes.

Madhukar Pichad, chairman of the Agasthi cooperative sugar factory in Ahmadnagar, said: “OGL exports will certainly benefit mills, cane growers in particular, especially when sugar prices are showing an upward trend in the global market. Cooperatives have been arguing in favour of restarting OGL exports due to bumper crop in the state.”