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Sugar export likely to end with shortfall, only 56% of target achieved

Several incentives were linked with fulfilment of export quota

Dilip Kumar Jha  |  Mumbai 

Sugar
The government has introduced incentives for the industry such as transport subsidy, permission to release a similar quantity for the domestic market, and interest subsidy for maintaining buffer stock

Sugar mills have exported 2.8 million tonnes (mt) of the sweetener so far this season. This is only 56 per cent of the cumulative 5 mt of total minimum indicative export quota allotted for the current season (October 2018-September 2019).

"Indian mills have contracted for 3 mt of sugar exports, of which 2.8 mt has been dispatched. Another 0.5 mt of sugar can further be exported by September. Thus, India's will fall short by around a third of its allocated quantity this year," said Praful Vithalani, chairman, All India Sugar Traders' Association.

The government has introduced incentives for the industry such as transport subsidy, permission to release a similar quantity for the domestic market, and interest subsidy for maintaining buffer stock. Many sugar mills, however, have failed to achieve their capacity allotment due to circumstances beyond their control.

Last year, the Cabinet announced Rs 1,000-3,000 a tonne of transport subsidy to sugar mills, depending on their distance from ports. Also, the government approved the transfer of Rs 138 a tonne to farmers for the crushing season of 2018-19.

"sources estimate that Indian sugar mills have contracted for around 3 mt of sugar exports so far this year… The export programme is linked with 100 per cent fulfillment of export quota," said Abinash Verma, director general, Indian Sugar Mills Association.

The export quota looked ambitious in the beginning of the season because of the surplus sugar in the global Prices in the international remained subdued almost throughout the season. Also, Indian sugar mills focus primarily on white sugar. Global markets require raw sugar. Local sugar mills produce raw sugar only in the crushing season, which may hinder exports.

"Sugar mills in India can be divided into three groups - mills that want extra quota as they have achieved their own allotted quota, ones that have achieved a part of their export quantity allotment, and mills that could not export at all. But, mills that failed to achieve their individual allotted quantity will not be able to get export incentives. The government is going to take a call in September," said Prakash Naiknavare, managing director, National Federation of Co-operative Sugar Factories.

Mills that were unable to export might sell sugar to mills that can export more. Meanwhile, sugar mills in India have reported a total sweetener output at 32.12 mt as of April 30, 2019, which is 0.94 mt higher than last year.

The season is likely to end with 33 mt of output as some mills are continuing their work and will add to the total production.

The sugar recovery in North India has been better than last season. In the other parts of the country, including Maharashtra and Karnataka, the recovery is better than last year, though not as high as achieved in North India.

Therefore, the quantum of sugarcane crushing in the current season is less than that in the last season. Considering the opening balance of 10.7 mt as of October 1, 2018, and the estimated production of 33 mt, as against domestic consumption of 26 mt and 3.5 mt of exports, the total carry-over stock for the next season is estimated at 14.2 mt.

First Published: Tue, May 14 2019. 09:24 IST
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