Govt mulls surplus sugar export via barter trade

Will exchange against import of farm commodities to help mills offload surplus stock and clear cane arrears

Government is considering a proposal to allow export of four million tonnes (mt) of sugar through barter trade against import of farm commodities to help mills offload surplus stock and clear cane arrears of over Rs 14,000 crore, Food Minister Ram Vilas Paswan said today.

Last week, Prime Minister Narendra Modi had called a meeting to address the sugar sector crisis and directed the concerned ministries to explore possibility of increasing sugar exports and long-term solution to resolve the concerns of millers and farmers. While a proposal to allow sugar export via barter system is being explored, but no decision has been taken yet on “compulsory export” of the sweetener, he added.

Paswan said the sugar industry should think over ways to barter sugar for other farm commodities with other nations. It should also find out about the countries which are in need of sugar under the barter system. A broad contour of the policy is being formulated but a a final call on this proposal would be taken after another round of meeting, which will be convened soon by the Prime Minister, sources added.

Stating that exports via normal route at current rates are not viable in view of sharp fall in global sugar prices, Paswan said: “Sugar is available at Rs 19 a kg in the world market, while it is costing Rs 20 a kg in the domestic market.If we export more quantity, global prices will further fall.”

The Minister also mentioned that raising of import duty on sugar to 40 per cent has also not helped much. India is a major importer of edible oils from Indonesia and Malaysia, and of pulses from Canada, Australia and Myanmar.

Sugar industry, which owes about Rs 14,398 crore to cane farmers, is unable to make payment as it is facing severe liquidity crunch on account of surplus production that has resulted in low prices of sugar in the domestic markets.

Ex-mill sugar prices have fallen below Rs 20/kg in the country, while the cost of production is over Rs 30/kg. There is still surplus stock of 10 million tonnes in the country.

Sugar production of India, the world's second largest producer and biggest consumer, has been more than the country's demand for the past five years.

Sugar output is estimated at record 28.3 million tonnes in 2014-15 marketing year (October-September), as against 24.3 million tonnes in the previous year, while the total annual demand is pegged at 24.5 million tonnes.