Ministry asks DGFT to stop sugar export registrations

Sugar exports are free under the current foreign trade policy

The ministry of food has directed the Directorate General of Foreign Trade (DGFT) to stop further registration of sugar export. However, the decision is yet to be notified.

Sugar export is unrestricted under the current policy.

Sources said exporters will honour commitments for registrations made till September 30. They added there had been cancellations even in registrations already contracted since prices are more remunerative in the domestic market than abroad.

The food ministry has estimated production of 23.5 million tonnes (mt) for the current 2012-13 season, as against 26.2 mt last year. According to officials, the major shortfall has been in Maharashtra which has estimated production of 6.2 mt, against nine mt last year. A part of the crop has been diverted for fodder in the state. Uttar Pradesh , the largest producing state, has estimated 7.2 mt of production this year, marginally higher than last year’s 6.95 mt. The higher estimate is based on high acreage in the state, said officials.

According to sources, even if UP’s estimates are higher, the recovery (conversion of sugarcane into sugar) fluctuates, depending on the state advised price (SAP). “Many producers divert sugarcane for gur and khandsari for better remuneration and, thus, the higher estimates do not materialise in reality many times. Therefore, shortfall in Maharashtra is a cause of concern,” said officials.

They added that 23.5 mt was a conservative estimate calculated by state cane commissioners from data based on September and many of the states have not accounted for the recovery seen in acreage, following resurgence of monsoon towards the end of kharif season, especially in Karnataka and Maharashtra. Therefore, once the late harvest starts coming into the market by the end of November, estimates could be a little higher than 23.5 mt.

India’s annual consumption is 22-23 mt. According to industry reports, apart from low rain, Maharashtra also saw diversion of cane into fodder, owing to lucrative prices and fears of low rain in the kharif season. In Uttar Pradesh, however, farmers have reportedly planted cane in an additional 90,000 hectares, about four per cent higher than last year, prompted by a high SAP last year. So far, sowing in Uttar Pradesh rose to 2.36 million hectares, against 2.27 million hectares last year, according to the government data.