Falling prices of raw sugar keep Maharashtra millers away from exports

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Pune | Published: February 24, 2015 12:07:09 AM

With the prices of raw sugar falling in the global markets, mills in Maharashtra do not seem to be very keen on raw sugar exports...

With the prices of raw sugar falling in the global markets, mills in Maharashtra do not seem to be very keen on raw sugar exports despite incentives announced by the Centre last week. Several mills are of the opinion that the Centre’s subsidy of R4,000 a tonne for exporting 14 lakh tonne of raw sugar is too little to survive and has come a little late in the season.

Maharashtra cooperation minister Chandrakant Patil’s announcement that the state would offer a subsidy of R1,000 per tonne, in addition to the incentives announced by the Centre,  is also yet to bring  cheer to millers.

According to Sanjeev Babar, MD, Maharashtra State Cooperative Sugar Factories Federation (MSCSFF), since the international prices of raw sugar have fallen, it will be difficult for mills to participate in exports. Last year, Maharashtra exported some 7 lakh tonne of raw sugar. This year, some mills have entered into forward contracts with exporters for about 2 lakh quintals of raw sugar but these are without the incentives, Babar pointed out.

To make raw sugar export viable, its price should be over 15 cents a pound in the international market. The decision regarding the incentives announced by the state government is yet to be taken at the Cabinet level, he said.

“Besides, the government’s condition of 25% ethanol sale to oil marketing companies mentioned in the raw sugar subsidy package should have been released at the time of launch of current crushing season. The government is demanding 5% deposit at the time of quoting of ethanol supply which is also not possible due to the present financial crisis faced by the cooperative sugar sector,” Babar noted.

Maharashtra sugar commissioner Vipin Sharma said that in light of the falling prices, the subsidy given by the government would only go into filling up gaps and this would not be of any use to mills. Moreover,  several factories in the state will start to shut down operations from the first week of March marking the end of the season and at this stage they will not be keen to get into exports, he said.

Traders are waiting to see how much raw sugar is contracted from Maharashtra, Yogesh Pande, founder president,  Maharashtra Sugar Merchant & Brokers Association (MSMBA) said.” Millers are skeptical to produce raw sugar with the condition of the ethanol supply to OMCs.

If raw sugar is not exported in coming months, there will be pressure of excess sugar in the market,” he said.

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