Indian sugar mills association

To help mills, govt may allow 1 mt of fresh sugar exports

Date:	30 Jan 2012

Source:	The Financial Express

Reporter:	FE Bureau

News ID:	890

Pdf:
Nlink:

New Delhi: The government will likely allow 1 million tonnes of fresh sugar exports this marketing year in a bid to help cash-strapped mills take advantage of higher prices abroad and repay farmers for previous cane purchases, official sources said on Monday.

The food ministry is also considering proposing some changes to the export permit rules to expedite cash flow into the mills and enable them to clear their arrears on account of cane purchases quickly.

However, an empowered group of ministers (EGoM) on food, headed by finance minister Pranab Mukherjee, will take a final call on this issue when it meets on February 7, said one of the officials. At present, the ministry fixes the sugar export quota for mills based on their average production over the past three years.

The EGoM will likely clear the fresh sugar exports over and above the 1 million tonnes that has been approved so far this marketing year through September 30, one of the sources said.

The food ministry has also circulated a status note on the domestic sugar scenario and the possibility of fresh exports to ease the crisis faced by both the mills as well as farmers.

The sugar industry often blames 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 month, the Supreme Court asked the sugar mills to repay within three months around R900 crore to farmers in Uttar Pradesh for cane purchases made during 2006-08.

India, the world`s second-biggest sugar producer and largest consumer of the sweetener, is expecting production of 24.7 million tonnes in 2011-12, compared with an estimated consumption of around 21.5 million tonnes, leaving enough room for exports. The country produced 24.3 million tonnes in 2010-11. The domestic industry has been demanding that exports of 3 million to 4 million tonnes be allowed in 2011-12 as domestic supplies remain plentiful.

US raw sugar futures crashed 27% in 2011, the first annual fall in four years, on higher output in Asia and Europe. However, exports are still more remunerative for Indian mills as domestic wholesale prices have remained subdued for more than six months now due to adequate supplies.

March sugar futures on the National Commodity and Derivatives Exchange rose 0.21% to R2,892 per quintal in intraday trade on Monday, as anticipation of the government permitting fresh exports offset the impact of higher supplies.

However, sugar prices fell marginally to R2,800 per quintal in the Kolhapur spot market in top producing state of Maharashtra.

The country`s sugar output rose 19% between October 1 and January 15 from a year earlier to 10.45 million tonnes due to higher cane crushing as well as a good recovery rate in Maharashtra, according to the Indian Sugar Mills Association.

News

Navigation