The food ministry is mulling a proposal to allow export of another 0.5-1 million tonnes of sugar during the current sugar season that started in October. The proposal will be taken up at the next meeting of an empowered group of ministers, headed by Finance Minister Pranab Mukherjee, this month. The new quota will be over and above the export of 1 million tonnes allowed by the government in November.
“Sugar prices have been largely stable on account of higher production and availability. Therefore, more export is being considered, so that mills have improved cash flows and can make timely payment to farmers,” said a government official.
However, the government may have to seek permission of the Election Commission for the move, as the Model Code of Conduct is already in operation in the second-biggest sugar producing state of Uttar Pradesh. Of the 1 million tonnes of export allowed last November, 400,000 tonnes have been shipped.
Considering the fact that the entire quantity of exports allowed earlier had not been shipped yet, this time the export release orders could be staggered, he said.
Though international sugar prices have softened in recent months, an over 20 per cent weakening of the rupee against the dollar makes export remunerative. India, the second-biggest sugar producer after Brazil, exported 2.6 million tonnes of sugar in the 2010-11 season.
The industry has been seeking export of more sugar to offset their low domestic realisation. India is witnessing bumper cane production and output. According to the Indian Sugar Mills Association, the output is projected at 26 million tonnes for the 2011-12 season.
Up to December 31 (in the current season), the sugar industry produced 7.57 million tonnes, up over 17 per cent in the corresponding period of the previous season.
The country’s sugar production in 2011-2012 season is expected to rise to over 26 million tonnes as against 24.2 million tonnes in 2010-2011.
According to an Angel Broking report, a favourable decision on export will help sugar mills take advantage of competitive global prices and offset a rise in input costs. Further, exports will help reduce mills’ inventory, the cost of carrying extra sugar and check the chances of distress sale, besides improving cash flows of mills and helping them make timely payment to farmers during the crushing season.
