The central government is being lobbied to allow sugar exports, especially with prices soaring in global markets. The market opened today at $693 a tonne for futures, a jump on the London Exchange by $100 a tonne over the past four trading sessions.
The industry has made repeated pleas for allowing exports, especially with India expected to have a record production of 25 million tonnes in the crushing season of 2010-11. Besides, the carry-forward stock would be 4-5 mt.
A senior government official, who did not want to be named, told Business Standard: “The issue has been taken up by the cooperative and private sugar mills. However, the government has yet to take a decision.”
Industry sources recalled that the Centre had already taken a decision to allow advance license export obligations of about a million tonnes to be honoured. They suggested the government consider allowing a certain percentage of the new production to be exported over three months, starting October. It could review in December and decide whether to extend this by another three months.
Sources at the National Federation of Cooperative Sugar Factories and the Indian Sugar Mills Association argued the time was ripe to allow Indian sugar to enter the global market. “The government’s decision to allow exports will help reduce the probable inventory out of fresh production. This will also help farmers to get better realisation for their cane. Further, domestic prices, which are still ruling at below the production cost, can receive some reprieve,” said one.
However, these sources admit there is another school of thought in the industry which believes that if the export gates are opened, unlimited quantities might flow out. This would mean a resort to imports. “There is a possibility of rise in domestic sugar prices, which may attract criticism from a large section of the society,” sources said.
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Yogesh Pande, founder-president of the Maharashtra Sugar Brokers Association, said the Centre should soon take a decision on allowing sugar exports. “On the domestic side, prices of sugar are dull due to very high release orders in Maharashtra, which has received over 35 per cent excess release as compared to the previous month. Also, sugar mills are under financial pressure and are offering sugar at every given price.
Currently, sugar is in the range of Rs 2,470-2,500 a quintal (ex mill, ex duty). Compared to international prices, we are now selling at very large discount. It is the perfect time to open exports, initially for 2.5 mt.”