1. Raw sugar exports unviable

Raw sugar exports unviable

While the government had approved subsidies for the export of 1.4 million tonne of raw sugar in the current marketing year till September...

By: | New Delhi | Updated: August 12, 2016 1:22 PM
Sugar, raw Sugar, suagar export, sugar production, Sugar industry, economy news

India has exported just 91,000 tonnes of raw sugar after the government last month notified the continuance of the subsidy scheme up to September. (PTI)

While the government had approved subsidies for the export of 1.4 million tonne of raw sugar in the current marketing year till September,  mills and co-operatives are unlikely to export more than a fourth of this amount, thanks to a persistent drop in global prices in recent months, reports Banikinkar Pattanayak in New Delhi. The announcement of the subsidy was delayed by five months.  That discouraged raw sugar production while  the fall in global prices has made exports unviable at the  subsidy of R4,000 per tonne.

India has exported just 91,000 tonnes of raw sugar after the government last month notified the continuance of the subsidy scheme up to September, while almost 30,000 tonnes were exported without subsidy earlier in the marketing year, according to the Indian Sugar Mills Association.

Raw sugar is barely consumed domestically, so its production is solely dependent on export orders.

Even if global prices recover a bit, mills won’t be able to able export more than 3,00,000 tonnes this year due to limited production, according to industry sources.

At Monday’s price in New York, Indian raw sugar exports would be viable with a subsidy of Rs 11,400 per tonne, much above the current dole-out level. While calculating the subsidy, the government had estimated global raw sugar prices at around 16 cents per pound–much higher than 12.69 cents on Monday. Similarly, for refined sugar exports to be viable now, mills would need a subsidy of Rs 8,800 per tonne.

However, some mills, especially in Maharashtra, had exported raw sugar under the subsidy scheme last month when prices were still better.

This is because their losses on account of the outbound shipments were still slightly less than those on their domestic sales, thanks to a plunge in ex-factory prices of the sweetener locally. However, with international raw sugar prices dropping below 13 cents per pound, even that opportunity to sell abroad at lower losses is also gone, millers said.

Mills across the country have been facing losses this year, as cane costs remain high, while sugar prices have hit multi-year lows due to a fifth straight year of surplus production locally and a drop in global prices as well. Consequently, cane dues across the country hit a record Rs 19,244 crore until March 31.

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