Govt resumes release order on sugar export

Written by Commodities Bureau | New Delh | Updated: Dec 30 2008, 06:31am hrs
With sugar production expected to fall below 20 million tonne in 2008-09, the government on Monday regulated exports by re-imposing the release order mechanism for exports from January 1, 2009. Through the release order for exports, the government will fix the quantum of sugar that each mill can export, similar to controls placed on domestic production each month. This helps in monitoring the movement of sugar outside the country and also curtails any excess exports.

The system for obtaining release order for exports was dispensed on July 2007 because of huge inventories with mills on the back of two consecutive years of bumper harvests. The relaxation was further extended till December 31 as retail prices showed signs of moderation. However, official sources said that with output in 2008-09 projected to fall by more than 6.0 million tonne to less-than 20 million tonne it was not found prudent to further relax curbs as it might aggravate the local shortage and thereby push prices up.

Although prices have eased a bit since October, because of various steps taken by the government, like dismantling of buffer stocks, and due to sufficient carry-over stocks, the government does not want to take any chances as the pipeline is getting dry, a senior government official said. Exports under advance licence obligation would continue without any release-order requirements.

India exported around 4.5 million - 5.0 million tonnes of sugar in 2007-08, while exports in 2008-09 are estimated to be less than 2.0 million tonnes because of low local output and drop in international prices. Earlier, the government had also withdrawn a freight incentive of Rs 1,350-Rs 1,450 on each quintal of sugar exported.

Meanwhile, the central government fixed the January-March non-levy (free-sale) sugar quota at 5.0 million tonne, up from 4.4 million tonnes in 2007-08. The normal quota for January and February has been fixed at 15 million tonne each while for March it has been fixed at 16 million tonne. The remaining would come from dismantled buffer stocks.

The government has also decided that any unsold or undespatched stock of sugar for the January-March quarter would be converted into levy sugar and erring mills will be penalised.

Meanwhile, brokerage firm Prabhudas Lilladhar in a recent report, has further painted a grim picture for the Indian sugar sector. The report has stated that acreage of sugarcane could reduce by 17% in 2008-09, while further reduction of 6-8% in area is expected in 2009-2010(October-September). This would result in reduction in incremental supply by 4.2 million tonne, while incremental demand is expected to rise by an average 0.9 million tonne over the next couple of years, the report added. Sugar production is expected to be 21 million tonne in 2008-09, the firm said.