India

Low international sugar prices to hit India's exports

Low international sugar prices to hit India's exports

SUGAR exports from India are likely to be lower than expected due to low international prices and millers in the country preferring to convert their old stock into ethanol. Mukesh Kuvadia, secretary of the Bombay Sugar Merchants Association, said current international prices are not viable for exports, which might put a spanner in the government’s plan of 60 lakh tonne (lt) of exports.

“Since India announced its decision to export 60 lt of sugar, international prices have dovetailed. At present rates, most millers would rather hold on to their new stock or convert old stock into ethanol rather than sending it to export markets,” he said.

Last month the Cabinet Committee of Economic Affairs (CCEA) had announced a Rs 6,268 crore subsidy package to allow export of 60 lt of sugar from the country. Millers were to be given Rs 10,448 per tonne of sugar exported in lieu of handling, marketing, packaging and other costs. The amount was to be directly credited into the bank accounts of farmers and balance was to be credited to the mills.

However, this scheme, Kuvadia said, will not drive up exports given the exceptionally low international prices of both raw and white sugar. At current international rates, white sugar will have to be exported out at Rs 21 per kg, which means ex-mill realisation of Rs 19.50. Taking into account the Rs 10 per kg subsidy, the realisation of Rs 29.50 is lesser than the present Rs 32-32.40 per kg price. The scenario is almost the same in case of unrefined or ‘raw’ sugar, which is retailing at Rs 18 per kg in the international market.

In the last season, of the 50 lt export target, mills exported just 38 lt of sugar. But the delay in crediting the transport subsidy has been a major problem for mills.

Instead of exporting, millers say they would prefer converting their old stock of sugar into ethanol, which will be procured by oil companies at Rs 59.48 per litre. This would be the first time in the country when mills would be allowed to manufacture ethanol directly from sugar and cane juice. Mills in Maharashtra, whose carry forward stock is higher than those in Uttar Pradesh, would prefer to take this route rather than exporting. M D Joshi, managing director of the Kolhapur-based Jawahar Shetkari Cooperative Sugar Mill, said the stock which is lying unsold for the last 2-3 years would be converted to ethanol. “This would allow mills to generate ready cash and also liquidate their old stock,” he said.