Government also lowers export floor price of three premium rice varieties.
An empowered group of ministers (EGoM) on Friday cleared an additional 500,000 tonnes of sugar exports, taking the total sugar to be exported in the current crop year, ending September, to almost 1.5 million tonnes.
The ministerial panel headed by Finance Minister Pranab Mukherjee has also decided to lower the export floor price of three premium non-basmati rice varieties.
“The EGoM has decided to allow export of another 500,000 tonnes of sugar this season under an open general licence to help millers clear their inventories,” a senior food ministry official said after a meeting of the EGoM.
He added that an additional 78,143 tonnes of sugar had been allowed for exports to the US and Oman. But that is on a government-to-government basis.
In April and June, the government had allowed export of one million tonnes of sugar in two tranches, as domestic production exceeded demand during the current crop season.
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Sugar production in the 2010-11 crop marketing year is estimated at 24.2 million tonnes (mt), while consumption is projected to be 21-22 mt.
Sugar output last year was 18.8 mt.
Last week, Food Minister K V Thomas had met Agriculture Minister Sharad Pawar to discuss the issue of allowing more sugar exports, following persistent demand from millers. Officials said the food ministry was not very keen to allow more exports at this juncture because of the coming festive season.
“This is a welcome move as the exports would help in reducing the inventory and give an opportunity to Indian sugar mills to make some profit, as the international prices are almost Rs 4,000 per quintal more than the domestic rates,” Abinash Verma, director general, Indian Sugar Mills Association, told Business Standard .
He said the ex-mill price of sugar in domestic markets had dropped by Rs 2,000-3,000 per quintal since February, leading to huge losses for the mills which could have made cane price payment to farmers difficult in the next crop season.
The EGoM has lowered the minimum export price (MEP) of ‘sona masoori’, ‘rose matta’ and ‘ponni’ from $850 per tonne to $600 a tonne.
In March, the government had allowed limited exports of these three varieties.
However, the MEP was kept high to prevent export of common varieties of non-basmati rice.
Officials said the decision on lowering the MEP of the rice varieties was taken, as the procurement during the current crop year was at a record high.
Officials said the panel of ministers could meet next week to deliberate on allowing export of another one million tonnes of non-basmati rice and decide on wheat exports.
Last month, the EGoM had okayed export of one million tonnes of non-basmati for the first time in more than three years, as rice stocks reached record levels.
It has also given an ‘in-principle’ nod to wheat exports, but could not come to a consensus on the quantity because of low international price. It had left the matter to the commerce ministry to decide on the quantum and timing of exports.