Delay by the Centre has led to a precarious situation where exporters are not in a position to export sugar in the wake of lower prices. Considering the fact, sugar exporters in Gujarat fear tough times ahead. Prices of sugar have also started declining in line with the international markets and prices are likely to dip further in the coming day. According to industry sources, prices of sugar hovered around Rs 1,800 per tonne during November-2006, which have declined to Rs 1,470 per tonne currently. Attributing delay in allowing sugar exports by the Centre for prevailing precarious situation in sugar market, market players informed that sugar prices ruled at $420-425 per tonne in the international markets during October-November period which was the ideal time to allow sugar exports.
Now that the Central government has finally allowed sugar exports, prices in the international market have come down to $320-325 per tonne, which shows a decline of whopping $100 per tonne.
Taking current international prices, export price of sugar works out to be around Rs 13.50 per kg. We cannot afford to export sugar at such lower prices, sources complained.
Sources also said that, had the Centre allowed sugar exports during October-November in 2006, exporters could have exported more than 10 lakh tonne of sugar. In addition to this, with exporters giving a second thought to sugar exports, local markets are witnessing higher supplies, which indicate tough time for sugar industry in days to come.
Speaking to FE, Jayanti Patel, chairman, Chalthana Sugar, said, This year sugar production would be at least 240 lakh tonne, while the carry forward stock is 40 lakh tonne, which means that around 280 lakh tonne of sugar would be available in the domestic market. On the other hand, Brazil has also decided to focus on sugar production this year rather than using sugarcane for ethanol production.
In such circumstances, allowing sugar exports will not suffice, but the government will also have to provide some incentives to sugar exporters.