Indian sugar mills association

EGoM to discuss fresh sugar exports, onion supplies in February 7 meeting

Date:	21 Jan 2012

Source:	Financial Express

Reporter:	Banikinkar Pattanayak

News ID:	872

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New Delhi: An empowered group of ministers (EGoM) will on February 7 consider permitting fresh sugar exports to help mills benefit from higher prices abroad and repay farmers for previous cane purchases.
The EGoM on food, headed by finance minister Pranab Mukherjee, may discuss allowing one million tonne of sugar exports over and above the one million tonne that has been approved so far this marketing year through September 30, sources said.
It will also discuss domestic supplies, shipments and the benchmark export price of onion, they added.
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. Earlier this week, the Supreme Court asked sugar mills to repay around R900 crore to farmers in Uttar Pradesh for cane purchases during 2006-08 with in three months.
India, the world’s second-biggest sugar producer, allowed exports of 1.5 million tonne under the open general licences in 2010-11 in three equal tranches, starting April, after a gap of two years when it was forced to import the sweetener to tide over a shortfall. The country is expecting sugar production of 24.7 million tonne in 2011-12, compared with the consumption of around 21.5 million tonne, leaving enough room for further exports. It produced 24.3 million tonne in 2010-11. US raw sugar futures crashed 27% in 2011, the first annual fall in four years, as higher output in Asia and Europe offset a decline in production in biggest producer Brazil. Global sugar production will exceed demand by 4.5 million tonne in 2011-12 after around two years of a shortage, according to the International Sugar Organisation. However, exports are still more remunerative for Indian mills as domestic wholesale prices have remained subdued more than six months now due to adequate supplies.
Sugar futures for February delivery on the National Commodity and Derivatives Exchange almost remained steady and shed 0.25% to R2,847 per quintal in intraday trade on Friday, as expectations of the government allowing fresh exports blunted the impact of higher supplies.
The country’s sugar output rose 19% between October 1 and January 15 from a year earlier to 10.45 million tonne due to higher cane crushing as well as a good recovery rate in Maharashtra, according to the Indian Sugar Mills Association.
The EGoM will also discuss stocks of domestic onion supplies as wholesale prices of the key vegetable have crashed by more than a half since November due to a bumper crop, triggering sharp protests by farmers in the largest producing state of Maharashtra amid soaring cost of production. The government cut the minimum export price of common varieties of onion by $100 a tonne to $150 on January 11 to boost earnings of farmers. The export price of premium varieties such as Bangalore Rose and Krishnapuram were also reduced by $50 a tonne to $250.
Onion exports from India fell by around 23% between April and December from a year before, mainly as the government banned the shipments for more than a month in September and kept high floor prices for exports for most part of this fiscal to prevent any flare-up of prices. Onion prices more than trebled to R70 a kg in December 2010 within a month, sparking wide criticism by Opposition parties of the government`s inability to curb the prices.
Wholesale prices of onions tumbled to R425 per quintal in the trading hub of Lasalgaon in Maharashtra on Friday from R1,050 a quintal on November 2, official data showed. The prices have crashed to as low as R315 a quintal on January 11. The prices had shot up to R1,225 per quintal in September before the brief ban on export was imposed, the data showed.

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