India : Industry urges govt to allow 2 MT of sugar exports
The Indian sugar industry is seeking permission to export 2 million tonnes (MT) of sugar this season, citing surplus stock and lower production projections of 33.3 MT, slightly down from last season. While domestic consumption is anticipated at 29 MT, an opening stock of 8.47 MT and ethanol diversion create a surplus. Industry leaders, including Zuari Industries’ Alok Saxena, note that stagnant minimum selling prices (MSP) squeeze profit margins, and they face additional costs due to one-way freight policies for ethanol delivery. The government aims to reach a 20% ethanol blending target by 2025-26.
The sugar industry has urged the government to allow around 2 million tonne (MT) of exports of the sweetener in the current season (October-September) so that mills don’t have to incur the carrying cost of surplus due to expectation of better harvest and comfortable opening stocks.
According to Deepak Ballani, Director General, Indian Sugar Mills and Bio-Energy Manufacturers Association (ISMA), despite the projection of a small drop in the sugar production in the current season compared to previous year, the sugarcane yield and prospects of a better recovery has improved significantly because of adequate monsoon rains.
ISMA in its first advance estimate of the sugar production for 2024-25 season has projected the gross output of sweetener including diversion for ethanol is likely to be 33.3 MT against the 34.1 MT in the previous season.
With an opening stock of 8.47 MT on October 1, net availability of sugar for the current season is projected around 41.7 MT against an anticipated domestic consumption of 29 MT.
“With 4 MT of sugar to diverted for ethanol production and safety stock of 5.5 MT for two month’s consumption would leaves around 3 to 3.3 MT of surplus sweetner with the company,” Ballani told FE while adding that surplus stocks would result in losses for manufacturers which may affect the farmers payment for the sugarcane purchase
Earlier, India exported 6 MT of sugar in the 2022-23 season and since then the government has not allocated any quota for sugar export. Food ministry has earlier ruled out providing any quote for sugar export in the current season as they are closely watching the supply situation as crushing of sugarcane has commenced.
“Sufficient availability of sugar will not only ensure a comfortable stock for domestic consumption and sustain the ethanol blending program, but also open the room for exports, contributing to maintain the financial liquidity of sugar mills, enabling timely payments to farmers,” according to an ISMA note.
Alok Saxena, executive director, Zuari Industries, a leading sugar as well as ethanol manufacturers from Uttar Pradesh said while the fair and remunerative price (FRP) for sugarcane continues to rise, the minimum selling price (MSP) for sugar has remained stagnant, squeezing margins of the companies.
Food minister Pralhad Joshi had recently noted that the government is considering proposals to increase the ethanol price for the 2024-25 ethanol supply year (ESY), along with the MSP of sugar by the mills. The current MSP of sugar has remained at Rs 31/kg since February 2019.
Saxena of Zuari Industries pointed out that for ethanol supplies to various oil marketing companies depots, the government permits only one-way transportation freight, as sugar industries are required to deliver to these depots consequently, the industry bears the cost of both outbound and return transport, adding an additional financial burden.
In August, the food ministry had allowed the use of sugarcane juice and sugar syrup for ethanol production in the 2024-25 (ESY/November-October), reversing last year’s ban.
In December 2023, the government prohibited the use of sugarcane juice or sugar syrup for ethanol production in the 2023-24 ESY to ensure adequate sugar availability for domestic consumption and keep prices in check.
According to an official note, the blending percentage has touched 15.83% in July, 2024 and cumulative blending percentage has crossed 13.6% in the ongoing ESY 2023-24. Encouraged by this progress, the government has set a target of reaching 20% blending by the end of 2025-26.
Food minister Joshi has written to Niti Aayog to prepare a road map for achieving ethanol blending target to 25%.
Source Link : https://www.financialexpress.com/business/industry-industry-urges-govt-to-allow-2-mt-of-sugar-exports-3659312/
