Govt pushes for sugar exports to avoid glut

Agriculture Minister to meet major exporters today.

The Union Agriculture and Food Minister Sharad Pawar has called a meeting of the country's top sugar companies tomorrow to expedite exports.

SWEET PILLS

Domestic sugar prices have firmed up by about Rs 100 a quintal on lower output projections and mills are reluctant to undertake exports

Production may cross 26 million tonnes in the current season (October-September)

In March 2007, the government extended an export subsidy of Rs 1,350 a tonne on sugar exports for the coastal mills and Rs 1,450 a tonne for non-coastal mills.

Pawar had indicated in December that the government might consider extending exports subsidy by another year

The meeting comes at a time when domestic sugar prices have firmed up by about Rs 100 a quintal on lower output projections and mills are reluctant to undertake exports.

Some mills are also understood to have defaulted on exports contract since domestic prices have significantly increased after the contracts were entered.

"The sugar mills have stopped contracting exports ever since the domestic prices recovered. This may create problems in the near future since production may well cross 26 million tonnes in the current season (October-September). The government is keen to ensure exports to the maximum possible level," said informed sources.

Leading companies such as Bajaj Hindusthan, Triveni Engineering and Industries, Dhampur Sugar Mills, Simbhaoli Sugars, Renuka Sugars, Sakthi Sugars and EID Parry among others have been called for the meeting.

Exports were banned for a six-month period in June 2006 to check the domestic sugar prices and control inflation. The ban was lifted only in December 2006.

The year saw a record sugar production of 28.3 million tonnes (against 19.2 million tonnes in the previous year) and domestic prices crashed by over 35 per cent.

Sugar mills started incurring huge losses and consequently payments to the sugarcane farmers began to suffer. Moreover, by the time the ban was lifted, the international sugar prices had softened considerably, rendering export unattractive. The country was faced with a glut situation.

In March 2007, the government decided to boost exports by offering an export subsidy of Rs 1,350 a tonne on sugar exports for the coastal mills and Rs 1,450 a tonne for non-coastal mills.

The exports subsidy is valid till April 2008. Pawar had indicated in December that the government might consider extending exports subsidy by another year.