The sugar industry, which has been grappling with lower prices and surplus stock, is keen on the continuation of the export subsidy on raw sugar exports, which would help it reduce some of its stocks.
The sugar output for the 2014-15 season was estimated at 25-25.5 million tonnes, while domestic consumption was at 24.7 million tonnes, according to government figures. Besides, the opening stock on October 1 was at 7.45 million tonnes. Industry watchers feel there are no positive cues for sugar, and encouraging more exports is the only alternative.
“There are no issues on the supply side because of the surplus,’’ Pallavi Munankar, sector analyst at Geofin Comtrade, a commodity trading outfit, said. “Sugar prices are under pressure, and mills are continuously selling as there is a huge stock.’’
Besides, the world’s largest sugar producer Brazil witnessed drought conditions in the April-September season. “For the first time in five years, the global sugar market may slip into a deficit albeit not a large one and this could continue into 2015-16 owing to lower production and increased consumption,’’ Ms. Munankar said.
To take advantage of the global scenario, the industry expects the government to extend the sugar subsidy scheme, which was introduced in February by the previous government. The scheme was to be reviewed every two months, and under it, raw sugar exports of up to 40 lakh tonnes would receive a subsidy of Rs.3,300 a tonne. This was revised to Rs.3,371 a tonne for the August-September, 2014, period.
A source from the Uttar Pradesh Sugar Mills Association (UPSMA) said the industry situation was grim. “The major concern is sugar prices and survival for mills is difficult. Millers have started crushing cane”, but the government has to continue encouraging exports due to huge inventory.’’
India exported 7 lakh tonnes of raw sugar in the 2013-14 marketing year ending October, 2014. The other option for the government is increasing ethanol blending in petrol. While the quantum of ethanol blending in petrol was doubled to 10 per cent, an industry expert said the problem was the volume of ethanol by petroleum companies for blending was only around 3 per cent.
