Challenge to export maximum sugar in three months daunts sugar mills

After the approval of a subsidy of Rs. 3,500 crore for sugarcane farmers by the Cabinet Committee on Economic Affairs, sugar mills are in quandary thinking how to export maximum stock of the commodity in the next three and a half months.

According to the National Federation of Cooperative Sugar Factories Limited (NFCSF), sugar from Brazil will not come in the international market till April and Indian mills can take benefit of this.

“Though the government’s decision has come a little late”, said NFCSF managing director Prakash Naiknavare. ”Sugar mills must not lose the opportunity. Mills have fair chance to export sugar as the sugar from Brazil will not be in market till April. Sugar mills, especially the ones from Maharashtra must take the benefit of the situation,” he added.

The industry was anxiously awaiting the announcement of sugar export policy for 2020-21 as the opening stock of 107 lakh tonnes plus and estimated new production of 311 tonnes. lt will result in highest ever closing stock of 158 lt valuing Rs. 50,000 crore at the end of the current 2020-21 sugar season. The platued domestic consumption is about 260 lt.

India exported 6.25 lakh tonnes in 2017-18, 30 lakh tones in 2018-19 and record creating 57 lakh tonnes in SY2019-20. This helped to trim down inventory easing liquidity and containing cane arrears to a great extent.

According to the Indian Sugar Mills Association (ISMA), as per trade and market sources, about 2.5-3 lakh tonnes of sugar has been physically exported in the current sugar season so far after October 1. This will be accounted for against the MAEQ of last season of 2019-20 as the export policy for last year was extended up to December 21, 2020, thus almost fully achieving the target of 60 lt of sugar export for the 2019-20 sugar season.

“Now, as the sugar export programme has been announced by the government, the sugar industry is expected to respond in a similar manner as during the last year and is confident of achieving the target of 60 lt of sugar export, considering the demand from importing countries like Indonesia, Malaysia, etc,” ISMA added.

The industry is also awaiting a government decision on the increase in MSP of sugar which was last revised almost two years ago. According to ISMA since the government has already increased the FRP of sugarcane by Rs.10 per quintal for the current year, there is a need to increase the MSP of sugar to Rs. 34.50 per kg. The ex-mill sugar prices are under pressure in most of the States and to ensure that sugar mills are able to pay to farmers on time, there is a need to quickly decide on increasing the MSP of sugar.

The late decision on MSP has already affected the cane payment ability of the sugar millers. According to ISMA, the current cane price arrears are reported to be about Rs. 3,500 crore and if the MSP is not increased quickly, the arrears will jump to uncomfortable levels.