Sugar Industry Asks Govt to Increase Exports to Deal with Low Prices

June 29th, 2018


Category: Sugar

(Moneycontrol) – Sugar industry has urged the Centre to sharply increase its export targets to cut losses as the cash-strapped mills are struggling to deal with low sugar prices in domestic market, reported Business Line.

In a meeting, earlier this week, the industry representatives asked the government for an “enforceable mandate” to ensure an export of 80 lakh tonnes of sugar in the current and the next season.

Sugar prices drifted down owing to reduced offtake by bulk consumers and stockists against ample stocksdue to increased supplies from mills.

The Indian Sugar Mills Association has supported this move provided the minimum selling price of sugar at Rs 29 a kg is increased to equate the cost of production, which is about Rs 34 a kg. This would give the mills financial strength to absorb export losses, the association told the paper.

Giving away with export subsidy and the complicated monthly release of sugar may also help the sugar mills, the association said.

These measures would help sugar mills absorb the export loss and benefit from better prices in the domestic market as India’s sugar production is estimated to jump at record 315-320 lakh tonnes in the current marketing year ending September on higher cane output.

In these two years, sugar production will grow to 640-650 lakh tonnes as against a domestic consumption of about 520 lakh tonnes, the industry representatives told the paper. This means that the government may have to export 60 lakh tonnes of sugar in FY19 (October-September) in addition to the planned export of 20 lakh tonnes.

Sugar mills have shown interest in the 20 lakh tonnes buffer stock mechanism under which some of the surplus would be held back from the market, the report said. The participation in the programme, however, is lacklustre at just 6 lakh tonnes owing to the sugar mills’ dire need of immediate liquidity.

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