KOLHAPUR: The Centre's decision to set a target of sugar export has irked sugar factories because the government has not mentioned any subsidy to the export. The factories have also claimed that setting such a target was against their business interest because export at lower cost would mean loss.

The sugar factories in the country have been given a export target of 40 lakh tonnes of sugar for the marketing year ending September 2016. The sugarcane crushing season will start in November this year and would continue till April 2016.

The recent circular from the ministry of food and civil supplies has stated that if the sugar factories achieve the target, it would help them clear the arrears of Rs 14,000 crore to farmers. The target for Kolhapur-based factories is 14 lakh tonne.

At present, the sugar factories in the state have arrears of Rs 2,700 crore as many factories have claimed that the conditions are not favourable for selling sugar. As per the circular, the factories will have to start their export from October 1 this year and they can achieve their target by September 2016.

Prakash Awade, chairman of Kallappanna Awade Cooperative Sugar Factory, Hupari, said, "In a way, it is a good decision. The factories should be pushed a bit to export the sugar so that existing stock will be cleared. The limited income still can be used to clear arrears and make some payments, which will enable the factories to seek fresh seasonal loans for the upcoming season. It is true that sugar rates in the international as well as domestic market are not very good but piling up of the stock is risky."

When asked about any financial support or subsidy component while setting the targets for export, Awade said, "There is no such communication as of now. It will take some time to know the details or export promotion move of the government. Till then, we have decided to wait."

Awade's factory is the second largest in the state in terms of sugarcane crushing capacity. The factory has received the target of exporting 1.35 lakh tonne sugar till September 2016.

Sugar production is estimated to be at a record 283 lakh tonnes in 2014-15 marketing year (October-September) while the total annual demand is around 245 lakh tonnes. Due to surplus sugar production, sugar prices in the country have fallen below Rs 20 per kg, while the current cost of production is over Rs 30 a kg.

To address the issues at hand, the government has extended a soft loan of Rs 6,000 crore for the clearance of arrears, raised the import duty on sugar from 15% to 40%, increased the export subsidy to Rs 4,000 per tonne and raised the level of ethanol blending in petrol to 10%. These moves, however, have not brought a major change because of less exports.

Raju Alurkar, Kolhapur-based sugar trader, said, "Unless there is some subsidy component, such targets are not going to be helpful. The factories will not export sugar and incur losses. The production cost is higher than the export cost; hence it is absurd to set such targets without any support."