Indian sugar mills association

EGoM may decide on sugar expor

Date:	20 Oct 2011

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News ID:	596

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An empowered group of ministers (EGoM) is expected to consider allowing fresh sugar exports in the marketing year that started October 1 and slashing the benchmark export price of onion on Thursday, although the ministries of agriculture and food differ over the timing of pledging further exports of the sweetener, sources said on Wednesday. While the agriculture ministry wants a clear policy on sugar exports for 2011-12 to be spelt out in October, the food ministry is not in favour of making any export commitment before the peak festival season of Diwali ends, the sources said. This apart, the food ministry, which is mandated to firm up sugar output estimate, has projected production of 24.6 million tonne in 2011-12, while agriculture minister Sharad Pawar says the production could be as high as 25.5 million tonne. The sugar industry has forecast an even higher output at 26 million tonne. The country expects to consume around 21.5 million to 22 million tonne sugar in 2011-12, leaving room for some exports, government and industry officials say. The output estimate is important as any decision by the EGoM factors in domestic supplies first. India, the world’s second-largest sugar producer, allowed sugar exports of 1.5 million tonne under the open general licence in 2010-11 in three equal tranches, starting April. The exports were allowed after a gap of two years. Industry executives had said sugar mills lost out on a chance to maximise export returns by cashing in on soaring global prices in February and March due to the late decision by the government. While some quantities of sugar are yet to be exported from the approved quota in 2010-11, the industry wants clarity on sugar exports during 2011-12 early to benefit from a lower-than-expected output in top exporter Brazil and also to prevent a repeat of last year’s liquidity crunch due to the delay in export policy announcement. Pawar has said domestic prices of sugar are stable and the country expects adequate year-ending stocks of around 6 million tonne in 2010-11, equivalent of more than three months’ consumption, which means the country wouldn’t have a shortage even if fresh exports are permitted. Sugar mills often blame low sales realisation in the domestic market and the lack of a clear export policy for non-payment of arrears to farmers for cane purchases. Mills owe as much as R2,591 crore in sugarcane arrears between October 1 and May 15 of the last marketing year and another R211 crore from previous seasons, mainly due to a fall in domestic prices. The EGoM will also decide on slashing the minimum export price (MEP) of onion exports from the elevated level of $475 a tonne. The sources said political parties from Maharashtra, the largest producing state of the kitchen bulb, are favouring a cut in the MEP so that onion shipments from the country have a competitive edge. The government had lifted a ban on onion exports on September 9, less than a fortnight after it had imposed a ban to control the spiralling domestic prices, but maintained a high MEP level to discourage exports of low-priced varieties of the commodity to ensure steady supplies. Separately, Thomas said the food ministry is planning to ask the EGoM to remove the restriction on piling up of rice stocks by traders and dealers, as the country has adequate grain stocks and it is also expecting a bumper harvest in the crop year through June 2012.

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