High Prices To Hit Sugar Exports

High domestic prices and an anticipated dip in output will substantially cut India's sugar exports in the 1996/97 (October-September) season despite the end of trade controls, officials said on Thursday.

"There is hardly any export after decanalisation," S L Jain, director-general of the Indian Sugar Mills Association (ISMA), told Reuters.

The government ended in January an export monopoly enjoyed by the Indian Sugar and General Industry Export-Import Corporation (ISGIEC), a private corporation set up by the sugar milling industry.

The decision on exports was considered an important step towards freeing the sugar industry from a decades-old system of licensing, pricing and distribution geared to balance the interests of producers and consumers.

"Indian sugar exports have come to a trickle because they are not viable. World prices are much lower," said Yatin Wadhwana, an official in a leading Delhi sugar export firm.

Food Ministry officials said the government had authorised the Agricultural and Processed Food Products Export Development Authority (APEDA) to export 250,000 tonnes of sugar after deregulation.

"Out of these, only 25,000 tonnes of sugar have been exported, by rail to Pakistan," Jain said. "Not one single shipment has gone after decanalisation."

Out of its authorised quota, APEDA issued licences for the export of 162,985 tonnes of sugar, out of which 36,000 tonnes have been physically exported, APEDA officials said.

India, a net sugar exporter since August 1995, had exported about 1.1 million tonnes until December 1996 when the government deregulated sugar exports, Food Ministry officials said. Agriculture Minister Chaturanan Mishra said earlier this week that sugar output in 1996/97 was expected to dip to 13 million tonnes from 16.5 million in 1995/96 but the situation would be comfortable due to excess carry-over stocks.

Mishra said the output was expected to decline due to a fall in the area under the crop in the current season. The acreage has fallen because farmers were discouraged by delayed payment for the previous season's sugarcane output. "The situation is quite comfortable. We have enough stocks," M S Bhatia, economic advisor in the Agriculture Ministry, told Reuters.

A senior Food Ministry official said: "We have stocks of 12 million tonnes, which is slightly less than that of one year's requirement, and production is still growing."

India entered the 1996/97 season with a carry-over stocks of eight million tonnes.(Reuter)

Muted impact of liberalisation

Nicole Mordant GRAND BAIE (Mauritius)

The impact of the recent liberalisation of the Indian sugar export market on world trade and prices is likely to be minimal, the International Sugar Organization (ISO) said on Thursday.

Fears that the massive eight million tonnes of white stocks held by India at the start of the 1996/97 crop year will flood global markets have subsided in the past few months, the ISO said in a paper read at its council meeting in Mauritius

. "This is because early expectations of a further production decline (in India) in 1997/98, if realised, would mean stocks would need to be depleted in order to meet domestic demand," the sugar body said.

"In the short term then, stocks will continue to be held by private millers...Exporters are likely to export small volumes of sugar for short term expediency in response to mounting storage costs."

Private traders and millers in India, the world's largest sugar cane producer and the second largest sugar producing and consuming nation, have been allowed to export since January. Before that all exports were done by the state.