MMTC sugar tender fails to enthuse exporters

Written by Sanjay Jog | Mumbai | Updated: Jan 9 2009, 03:25am hrs
Even as state-run MMTC invited bids for export of 15,000 tonne of sugar after a long gap under the advance licence scheme, a sector of the industry said that exports this year even under advance licence is not viable as local prices are high and there is an acute shortage of cane in some parts.

Although under the advance licence scheme mills are under an obligation to export specified quantity of processed sugar equivalent to the imported raws within a particular time, millers said that the process has not encouraged them much because local market is more favourable.

The millers also contend that the overall export scenario is bleak with just around 1.5-2.0 million tonne expected in 2008-09 as against 5.0 million, hence not much could be expected from that front as well.

Prakash Naiknavare, managing director of the Federation of Cooperative Sugar Factories in Maharashtra told FE, In view of strengthened domestic prices, the sugar producers are not very enthusiastic for exporters. However, exports under advance licence are of obligatory nature for which either the producer will offer sugar at the prevailing ex-mill domestic price or differ export obligation by bearing the penalty thereof. Under advance license the equivalent quantum of duty free raw sugar imported has to be exported within a specified period two years and every extension thereafter attracts penalty. These penalties increase for further extensions.

According to analyst, MMTC's bid is also important especially when nearly 30% of total consumption is used directly by household, while 70% is used indirectly.

Sugar consumption is expected to grow at the rate of 4-4.5 % because of steady growth of population by 1.3-1.4% per annum and growth of per capita income by 6.5-7.5% per annum.

The bid paper also said that Indian White Crystal Sugar S-30 / M-30, should be preferably from current crop. As far as polarisation is concerned it should not be less than 99.8 degrees, moisture: Not more than 0.1 % by weight and colour: 130 ICUMSA ICUMSA (International Commission for Uniform Methods of Sugar Analysis) maximum.

Meanwhile, Indias sugar production in 2008-09 is expected to fall to below 200 lakh tonnes, down from 263 lakh tonnes last year.

Bitter trade

Exports not viable as local prices are high, acute shortage of cane

Overall export scenario bleak with 1.5-2.0 million tonne expected in 2008-09

Sugar consumption is expected to grow at the rate of 4-4.5 %