Not so sweet: Maharashtra may not meet sugar export quotas

By: |
Pune | May 22, 2019 7:42 AM

The Centre is in the process of taking action against sugar factories not exporting the mandated quotas. Over 10 lakh tonne of sugar was exported from Maharashtra till the end of April.

Sugar output in India, ISMA,  sugar stocks, Maharashtra, ethanol production, sugar mill, sugar exports, sugarcane farmers
Sugar factories in Maharashtra are lagging behind in exports and are unlikely to fulfil their shipment quota allotted by the Centre.

Although international prices of sugar are lower than domestic rates, buyers have started buying sugar from countries across the world. Industry people believe this could lead to rise in exports from India.

Even as prices of exported sugar have increased by `100-200 per quintal because of the rupee depreciation, not much positive impact on exports is likely.

The Centre is in the process of taking action against sugar factories not exporting the mandated quotas. Over 10 lakh tonne of sugar was exported from Maharashtra till the end of April. However, many factories could not export sugar as per the first quotas allotted to them because of low prices. Some have exported raw sugar to the beginning. Their subsidies are yet to be received by factories.

Since the factories were not getting subsidies on time, they were avoiding exports. Now, that factories are getting better prices, they are still unlikely to meet their allotted quotas. Prices in the international markets remained subdued almost throughout the season. Also, Indian sugar mills focus primarily on white sugar. Global markets require raw sugar. Local sugar mills produce raw sugar only in the crushing season, which may hinder exports.

Although prices are low in international markets, buyers have begun sugar exports in anticipation of demand from countries around the world. In the initial phase, the sugar factories which had exported the sugar had received prices in the rates from `1,900-2,000 per quintal.

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Now, the rates have gone up from `2,150-2,200 per quintal. Since buyers are purchasing sugar at higher rates, factories could get benefits, industry people felt.

Sanjay Khatal, MD, Maharashtra State Cooperative Sugar Factories Federation, said this could be a temporary effect because of the rupee crossing `70 per dollar mark. There could have been some increase in buying from India. Mills from Maharashtra have exported nearly 10 lakh tonne while the allotted quota is around 15.50 lakh tonne. Another 5.50 lakh tonne is still to be exported.

Khatal pointed out that there has not been any kind of euphoric buying in the market. Some demand has come from Iran and from Africa for whites.

According to Mukesh Kuvediya, secretary general, Bombay Sugar Merchants Association, the total quota for exports across the country was 27 lakh tonne and 23 lakh tonne has already been exported with 2-3 lakh tonne worth deals in the pipeline.

I have not heard of any new deals signed in the market, he said.

The government has introduced incentives for the industry such as transport subsidy, permission to release a similar quantity for the domestic market, and interest subsidy for maintaining buffer stock. Several sugar mills, however, failed to achieve their capacity allotment due to circumstances beyond their control.

In Maharashtra the carry forward stock was around 53 lakh tonnes and another 107 lakh tonnes of sugar has been produced this season.The carry forward stocks and existing production now totals 160 lakh tonnes and some 60 lakh tonnes has been sold in the market so far ( both domestic and exports) which leaves a balance of 100 lakh tonnes. On the national front, the season is likely to end with 330 lakh tonnes of output.

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