Mills demand immediate sugar export for timely cane payment

The apex sugar bodies today asked the government to immediately allow normal export of the sweetener saying otherwise sugar mills may not be able to pay the mounting arrears to sugarcane growers.

The government should immediately permit normal export of sugar to prevent mounting sugarcane arrears to farmers as mills are facing losses of about Rs 150 per quintal in sale of sugar, the ISMA and NFCSF representatives said here.

In a joint press conference held here, Indian Sugar Mills Association (ISMA) and National Federation of Cooperative Sugar Factories (NFCSF) sought that the Centre should remove two big controls on the sector -- fixing monthly sale quota and asking mills to contribute sugar for ration shops at subsidised rate.

Pointing out that sugarcane arrear till December 2010 stood at about Rs 4,000 crore, ISMA President Narendra Murkumbi said: "There is surplus of three million tonne. We feel there is definitely a ground for allowing export of another two million tonne as a million tonne has already been shipped under the advance licence scheme (ALS)".

At present, the government has kept on hold export of 0.5 million tonne of sugar under OGL due to high inflation. But earlier, it had allowed mills to meet their export obligation (ALS) of nearly 1 million tonne by March 2011.

The industry has pegged sugar output at 25 million tonne for the 2010-11 sugar year (October-September), as against demand of 22 million tonne. Till February, about 16.3 million tonne of sugar has been produced, against 13.7 million tonne in the year-ago period.

"Since January, almost all sugar mills have been selling sugar at a price below the cost of production and are incurring a loss of Rs 150 per quintal. This is unfortunate since there is an opportunity to export surplus sugar as global prices are high by about Rs 500 per quintal," Murkumbi observed.

In Uttar Pradesh, cost of sugar production is Rs 2,950 a quintal, while ex-mill price is Rs 2,800 per quintal. Similarly, in Maharasthra, cost of production is Rs 2750 per quintal, ex-mill price is Rs 2,600 per quintal.

Murkumbai said the export would improve cash flow of mills to make timely payment to the cane farmers. At the same time, he warned that if the government does not allow mills to export sugar, "sugarcane arrear will further mount by the time crushing operation ends in April".

Noting that this is the opportune time to decontrol the sector as prices have plunged by 30% year on year and expected high production, Murkumbi said: "We should get freedom to sell our product, which all other industries enjoy."