Sugar exports are likely to slow down as the jump in domestic prices over the last few days has discouraged mills from signing new export deals despite a government mandate for overseas sales. The government had asked mills to export 40 lakh tonne of sugar, pro-rated based on their past production, by September 2016. However, due to the improvement in domestic prices to nearly R3,000 per quintal, mills are keen on selling in the local market rather than export sugar. This has led to concern in the government and mills have been sent circulars by the Maharashtra sugar commissionerate and the Federation of the Cooperative Sugar Mills to participate i

The issue is likely to be brought up at the general body meet of the Vasantdada Sugar Institute (VSI) in Pune on January 7, where mills will be asked to look into exports in order to be eligible for the export subsidy, Shivajirao Nagawade, chairman, Maharashtra State Cooperative Sugar Factories Federation (MSCSFF), said. Chairmen and managing directors of several mills will be attending the meet at VSI where Nationalist Congress Party (NCP) chief Sharad Pawar is likely to be in attendance. Although there has been a rally in prices over the last few days, not much of sugar has been lifted by traders and this is being seen as a move to bring sugar into the market that was earlier purchased by traders at lower rates, industry sources said. At a recent meet of the mills held in Pune, the state sugar commissioner is reported to have told factories to participate in exports in order to be eligible for the subsidy.

According to Nagawade, some 2.30 lakh tonne has been exported from Maharashtra so far and contracts have been signed for another 1.50 lakh tonne. Of the 40 lakh tonne, Maharashtra’s share in export is around 14 lakh tonne. So far, a meagre 2.30 lakh tonne has been exported and reaching this target will be tough for mills in barely nine months, industry sources said. There have been reports of some 24 factories exporting sugar and some 40 mills have signed contracts to be able to eligible to avail of the subsidy of R45 per tonne. The export quota was a means of asking mills to return the favour and the objective of giving incentives was to ensure farmers get paid.