Sugar mills call for easing of export ban, cite high raw sugar stocks
Reacting to the government’s decision to restrict the export of sugar from June 1, the Indian Sugar Mills Association (ISMA) said mills should be allowed to export an additional 1 million tonnes of sweetener during the current marketing season from October 2021 to September 2022. .
Shipments are the only viable option left for raw sugar produced this season, they said.
In a letter to the Food Secretary on Friday, ISMA Chairman Aditya Jhunjhunwala said that, based on government advice, a large number of sugar factories had signed export contracts and requested export visas. “The planning of raw sugar production for export is done in advance on the basis of export contracts. Since export orders are not issued for the full amount of contracted sugar, the excess raw sugar belongs to the sugar mills,” Jhunjhunwala wrote.
He said factories cannot convert stocks of raw sugar to white sugar because milling operations are complete for the season.
India, the world’s second-largest sugar producer, exported 3.06 million tonnes of the sweetener through June 2 this fiscal year, 53% more than a year earlier. The unusual rise lends credence to government fears that sugar stocks could be significantly depleted by the festival season if outbound shipments are allowed unimpeded.
The country, which capped sugar exports for the current marketing year through September at 10 million tonnes on May 24, has shipped far more raw sugar than refined sugar since April, official data showed. The trend was more pronounced in May, when it exported one million tonnes of raw sugar, well above 0.42 million tonnes of refined sugar. In April, it shipped 0.73 million tonnes of raw sugar compared to 0.71 million tonnes of refined sugar.
However, ISMA said that since the export orders were issued for partial contracts, the restrictions would also lead to complications such as litigation and hedging losses. “Furthermore, the goodwill of the sugar mills as well as the country will be at stake due to non-fulfilment of the contracts.”
At its committee meeting recently, ISMA revised the sugar production estimate upwards from 35 million tonnes to 36 million tonnes, mainly due to greater availability of cane in Maharashtra, Karnataka and Tamil Nadu.
Allaying the government’s fears of a shortage of sugar in the country and the resulting price hike, the letter says that even after record exports of around 8.6 million tonnes through the end of the month As of May, average domestic ex-factory sugar prices across India have not increased much and hover around 33-34 per kg, which is still below the cost of producing sugar.
“In view of the estimated increase in sugar production, we kindly ask you to allow the sugar industry to export an additional 1 million tonnes of sugar during the current season. This will in no way affect the national sugar situation and will leave enough sugar to meet the country’s needs for at least two and a half months from the next season from October 1, 2022,” the letter reads.