Indian sugar mills association

India can export one million tonne more sugar, says Pawar

Date:	06 Mar 2012

Source:	The Financial Express

Reporter:	FE Bureau

News ID:	966

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New Delhi: India, the world`s second-largest sugar producer, can export one million tonne of the sweetener on top of the two million tonne already approved for the marketing year through September, agriculture minister Sharad Pawar said on Monday, potentially helping mills to clear payments to farmers for previous cane purchases.

“There is scope for further exports in wheat, rice and sugar,” Pawar said on the sidelines of the Kharif conference. Although the government allowed unrestricted exports of wheat and rice late last year lifting a four-year-old ban, the minister`s latest statement assuages apprehensions about any immediate curb on grain shipments. Sugar exports, however, have been restricted with a ceiling, and an empowered group of ministers headed by finance minister Pranab Mukherjee decides on allowing fresh sugar shipments.

Pawar also said he would discuss with finance minister Pranab Mukherjee about the prospects of cancellation of licences of over 70 district cooperative banks that are unable to recover loans and are facing financial crunch.

“Notices have been given to over 70 district central cooperative banks (by the Reserve Bank) that there licences would be withdrawn if they do not complete recoveries by March 30, 2012 and improve their financial health,” Pawar said, adding that there could be an “adverse impact” on crop loans if the licences are cancelled.

Although the commercial banks also provide farm loans, they can`t entirely substitute district cooperative banks as they have a reach up to the village level, according to the minister. “That`s why I want to find a solution at the earliest,” he said. The government has set a farm loan target of R 4,75,000 crore for 2011-12.

On sugar exports, the minister said, “there is scope as well as adequate domestic sugar stocks.”

The country has allowed exports in two equal tranches so far in 2011-12, as domestic supplies have exceeded demand for a second straight year. India`s sugar output jumped 15% until end-February to 18.65 million tonne due to higher cane crushing, boosting hopes that production will exceed the food ministry`s estimate of 24.7 million tonne for 2011-12. The Indian Sugar Mills Association has forecast production to rise to 26 million tonne, compared with the expected consumption of around 21.5 million tonne.

The government had permitted 1.5 million tonne under the open general licences last year in three equal tranches, starting April 2011, after a gap of two years when it faced a shortage. 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 last year due to the late decision by the government.

The domestic industry has been demanding that exports of 3 million to 4 million tonne be allowed in 2011-12 as domestic supplies remain plentiful. Industry executives 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. In January, the Supreme Court asked the mills to repay around R900 crore to farmers in Uttar Pradesh for cane purchases during 2006-08 within three months. Global consultancy firm Kingsman had earlier said India needed to lift curbs to emerge as a regular exporter in a global market currently dominated by Brazil and Thailand.

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

Raw sugar futures on ICE for May delivery were steady at 24.92 cents a lb in early trade on Monday, aided by fears that harvesting in the centre-south Brazil may be delayed. Ex-factory prices of S30 grade sugar in Mumbai too remained stable and were ruling in the range of R2,910 to R3,060 a quintal on Monday.

Meanwhile, stocks of sugar companies based out of the second-largest producing state of Uttar Pradesh rose in intraday trading on Monday after exit polls suggested that the Samajwadi Party, known for its pro-sugar industry policies, may win the maximum number of seats in the just-concluded state polls. The results will be declared on Tuesday.

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