Within about a month of the central government allowing the export of 10 lakh tonnes of sugar during the current sugar season (2024-25), export deals for 5 lakh tonnes have been finalized. Out of this, 2 lakh tonnes have already been exported. The decision to allow sugar exports is proving highly beneficial for mills, with the ex-factory price of sugar for export reaching Rs 44,000 per tonne.
According to sugar industry sources, export deals are being made at up to Rs 44,000 per tonne. Most of the exports are being carried out by mills in Maharashtra. Sugar is being shipped to about a dozen countries, including African nations, Afghanistan, and Sri Lanka. So far, 2 lakh tonnes have been exported, and deals for an additional 3 lakh tonnes have been finalized. There is significant price negotiation by sugar mills regarding export rates, which has pushed the price to Rs 44,000 per tonne. Given this scenario, many sugar mills in Maharashtra are likely to pay farmers more than the Fair and Remunerative Price (FRP) for sugarcane in the current sugar season.
Sugar Prices Rise
Prices have increased due to a decline in sugar production this season. Domestic sugar prices have also risen. The ex-factory price of sugar in Maharashtra is currently around ₹3,800 per quintal, while in Uttar Pradesh, it is around Rs 4,000 per quintal. However, the government has fixed the minimum selling price (MSP) of sugar at Rs 3,100 per quintal, while sugar mills are demanding an increase to Rs 3,900 per quintal.
Decline in Production
In the 2024-25 season, the sugar industry has estimated production at 270 lakh tonnes, about 50 lakh tonnes less than last year. In the previous season (2023-24), 319 lakh tonnes of sugar were produced. The decline is attributed to weak sugarcane crops in major sugar-producing states such as Uttar Pradesh, Maharashtra, and Karnataka. Industry sources fear that sugar production may fall below 270 lakh tonnes.
The government has allowed the diversion of 37.5 lakh tonnes of sugar for ethanol production using sugarcane juice and B-heavy molasses in the current crushing season. However, it has not increased ethanol prices for either of these categories. With better sugar prices, sugar mills may reduce the quantity of sugar diverted for ethanol production, which could increase total sugar production.
Export Prospects
Industry sources indicate that there is time until September 2025 to export 10 lakh tonnes. Due to better prices this year, exports may increase next year, potentially reaching 40 to 50 lakh tonnes, as higher sugarcane production is expected over the next two years.
India recorded its highest-ever sugar exports of 112 lakh tonnes in 2021-22, during which the country also achieved a record sugar production of 360 lakh tonnes. More than 63 lakh tonnes of sugar were exported in 2022-23. In October 2023, the government placed sugar exports on the restricted list and did not issue an export quota for 2023-24. However, this year, the government lifted the ban on January 20 and permitted the export of 10 lakh tonnes of sugar for the current season.
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Source : Rural Voice
