Sugar export likely to end with shortfall, only 56% of target achieved

  • 14-May-2019
  • Sugar export likely to end with shortfall, only 56% of target achieved

Sugar mills in India have achieved 2.8 million tonnes of the sweetener exports so far this season, 56 per cent of the cumulative 5 million tonnes of total minimum indicative export quota (MIEQ) allotted for the current season (October 2018 – September 2019).

"Indian mills have contracted for 3 million tonnes of sugar exports of which 2.8 million tonnes have been dispatched. Another 0.5 million tonnes of sugar can further be exported by September 2019. Thus, India's sugar exports will remain short of achievement by around a third of its allocated quantity this year,” said Praful Vithalani, Chairman, All India Sugar Traders’ Association (AISTA).

The government in the beginning of this season allotted a quantity to individual mills for sugar exports for the current season with incentives including transport subsidy and also permission to release similar quantity additionally for domestic market apart from interest subsidy for maintaining buffer stock and so on. Most sugar mills, however, have failed to achieve their individual capacity allotment due mainly to circumstances beyond their control.

"Market sources estimate Indian sugar mills have contracted for around 3 million tonnes of sugar exports so far this year. Though, we have not complied any such data. Exports programme is linked with 100 fulfilment of export quota,” said Abinash Verma, Director General, Indian Sugar Mills Association (ISMA).

Firstly, the export quota looked ambitious in the beginning of the season mainly because of surplus sugar in the global markets making export realisation unviable. Sugar prices in the international markets remained subdued almost throughout the season.

Secondly, Indian sugar mills focus primarily on white sugar. Since, the global markets require raw sugar which Indian sugar mills produce only in the crushing season i.e. between October and April, scarce of raw sugar may hinder exports this season.

“Sugar mills in India can be divided into three groups i.e. mills which want extra quota as they have achieved their own allotted quota, some of them achieved a part of their export quantity allotment, and rest mills that couldn’t export at all. The government is going to take a call in September. But, mills that failed to achieve the individual allotted quantity, will not be able to get export incentives,” said Prakash Naiknavare, Managing Director, National Federation of Co-operative Sugar Factories. Mills that were not able to export their quota may sell those to mills that can export more.

Meanwhile, sugar mills in India have reported a total sweetener output at 32.12 million tonnes by April 30, 2019, around 0.94 million tonnes higher than its total output recorded by the same date last year. With over 100 mills continue their cane crushing even today, some more quantity of sugar can be added by the end of the current season and season is likely to end with 33 million output.

The sugar recovery in Northern India has been substantially better than the sugar recovery achieved in the last season. In the other parts of the country, including Maharashtra and Karnataka also, the sugar recovery is better than last year, though not as high as achieved in North India. Therefore, even though the quantum of sugarcane crushing in the current season is less than that in the last season, the sugar production in 2018-19 will be marginally more than last year.

Considering the opening balance of 10.7 million tonnes as on October 1, 2018 and estimated production of 33 million tonnes as against domestic consumption of 26 million tonnes and 3.5 million tonnes of exports, total carry over stock for the next season i.e. 2019-20 (October – September) is estimated at 14.2 million tonnes.

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