Sugar mills foresee output spike, want 8 mn tonne OGL exports next season

Urge timely decision on the matter as global prices are firm , and they can sign future contracts at good prices

In view of the expected surge in sugar production in the coming 2022-23 season that starts in October, sugar mills have urged the Centre to revisit its ongoing export policy and allow exports of about 8 million tonnes of the sweetener under Open General License (OGL) to maintain stable domestic market conditions.

According to sources, the Indian Sugar Mills Association (ISMA) stated in a letter to the government a few days ago, that sugarcane acreage in the 2022-23 season is expected to be around 2 per cent higher than the current year. This, along with the likelihood of a normal monsoon, will take domestic sugar production to about 39.4 million tonnes, without considering diversion towards ethanol.

This is similar to the estimated sugar production of the current year, which after accounting for 3.4 million tonnes diverted towards ethanol, has been pegged at 36 million tonnes.

“However, it appears that sugar production next year could be higher still, even after the possibility of higher diversion towards ethanol. There would be sufficient surplus for export,” the ISMA letter said.

Sugar millers said this is the right time to announce sugar exports under OGL as global prices are firm currently, and an announcement now will enable them to sign future contracts at good prices. This, in turn,  will allow millers to plan their season in advance.

“Further this will give a fair and transparent chance and equal opportunity to all sugar mills to participate in exports, instull confidence in the millers and maintain stable domestic market situation owing to sufficient available stock for internal consumption,” the millers said.

In the current season (2021-22), the Centre last month for the first time in six years, capped sugar exports to 10 million tonnes to prevent a drawdown in its stocks and a surge in domestic prices later in the year.

The country, the world’s biggest sugar producer and the second-largest exporter (Brazil top exporter), has contracted around 8.5 million tonnes for sending abroad in the 2021-22 season, which started in October.

Of that till May 15, around 7.1 million tonnes has been shipped.

“The limited objective of the government is that by the time the 2021-22 sugar season ends in September, India has adequate stocks to meet its three months’ consumption requirement (till December). Or else it might have to import sugar, which will be embarrassing and inflationary,” a senior industry official aware of the move had then said.

India consumes 2-2.5 million tonnes of sugar a month.