6New Delhi: Due to higher-than-expected domestic output, the Center is likely to approve an additional 1.2 million tonnes (MT) of sugar exports during the 2021–22 season, which ends in September, in addition to the 10 MT already fixed.
According to sources, during a meeting a few days ago, a high-powered panel of officials approved the higher export quota.
“This extra quota will be good enough to absorb the surplus production and still leave around 6-6.8 MT of sugar as closing stocks, which is roughly three-four months of consumption,” a senior industry official said.
A formal announcement regarding this is expected soon, the official said.
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Sugar production in the current year (2021-22) is now estimated to be over 36 MT, against the expectation of 35 MT.
Sharad Pawar, the leader of the Nationalist Congress Party and a former Union agricultural minister, requested in a letter to Prime Minister Narendra Modi last month that the 1 MT limit on international imports be relaxed because production was anticipated to be greater than initial projections.
In a related development, the Indian Sugar Mills Association (ISMA) demanded in a letter to the government on Wednesday that the Centre permit the export of at least 8 MT of sugar under the open general licence regime in the upcoming season (2022-23), which will start in October, in order to absorb the surplus that would otherwise pressure domestic sugar prices.
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Indian sugar production is anticipated to be around 39.97 MT in the 2022–23 season (October–September), which is about 0.6 MT more than the country’s production of 39.4 MT this year.
“This is pure sugar production numbers, without factoring in sugar diversion for the purpose of ethanol blending,” ISMA said.
The authority stated that the real amount of sugar available for consumption is anticipated to be close to 36 MT after accounting for the approximately 3.4 MT of sugar diverted for ethanol blending in the current sugar season.
As the nation strives for a higher blending percentage while keeping in mind the targets established by the Center, it was further stated that there will be more ethanol production in 2022–2023 and therefore more diversion.
According to ISMA, this means that in 2022–2023, there will be a 4.5 MT diversion to ethanol production. After taking into account diversion, this translates to production of 35.49 MT.
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ISMA said the surplus must be exported in order to prevent a glut on the domestic market, which would result in lower prices and prevent the sugar mills from making back their expenses. According to ISMA, they will ultimately be compelled to stop paying farmers for their cane.
The raw sugar prices, which were averaging approximately 19 cents per pound but have now fallen to about 17.5 cents per pound, indicate that the decision to permit exports next year needs to be made quickly as well.
“The industry feels that in case the government further delays announcing export policy for next year, the international sugar prices may weaken further, as a result of which the government may have to extend export support to the sugar mills to make exports remunerative for mills,” ISMA said in the letter.
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