Under pressure from various quarters and buoyed by higher estimates of sugarcane production, the food ministry is now set to fast-track the process of seeking sugar export approval from an empowered group of ministers headed by Finance Minister Pranab Mukherjee.
“I have got requests from the Maharashtra Chief Minister (Prithviraj Chavan) and some sugarcane societies to allow exports. The ministry will prepare a proposal by Tuesday and it will be put before the EGoM,” Minister for Food and Consumer Affairs K V Thomas told Business Standard.
The decision to expedite the proposal comes on the back of a revision in cane production estimates last week. The second advance estimates of farm production released by the agriculture ministry last week peg cane output for the current season at 336.7 million tonnes, 11.8 million tonnes higher than the first advance estimates.
In December, the food ministry, headed then by Sharad Pawar, decided to allow the export of 500,000 tonnes of sugar. Following that, a notification was issued on January 1 to allow 500,000 tonnes of sugar exports under the open general licence, as the government’s sugar production estimate of 24 million tonnes was seen adequate (though various sugar bodies have been estimating an even higher output of 25 million tonnes).
However, surging food inflation caused the government to route the export decision through an EGoM. The food ministry, whose charge had by then gone from Pawar to Thomas, acted extra-cautious and decided to wait for more data on sugarcane and sugar output before taking the proposal to the EGoM.
While the government’s estimate of 24 million tonnes was pegged on a sugarcane crop of 324.9 million tonnes, the new data call for a revision in the sugar estimate by at least a million tonnes.
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The sugar industry had been pressing for the opening of exports. While the December decision has improved the sentiment in sugar trade, the January decision caused panic and prices fell Rs 150-200 a quintal.
“Given the higher sugarcane availability, which will translate into higher sugar production, the earlier decision of allowing 500,000 tonnes of exports should be implemented. Prices have been falling and most mills have been selling at a loss for the last two weeks,” said Abinash Verma, director-general, Indian Sugar Mills Association.
Since the next year is also certain to be a surplus year, the opening stock of five million tonnes should be more than adequate, according to Sharma. This would leave a clear surplus of 1.8 million tonnes, of which the country could comfortably export over a million tonnes during the current year.
The government should allow exports immediately, as the viability would come down after April, he said. “At present, Indian mills have an opportunity to realise Rs 5,000-6,000 a tonne higher on exports,” he added.