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Sugar Output Up 61%, Exporters Seek More Subsidy Support

Author: The Finapolis Network/Wednesday, January 20, 2021/Categories: Exclusive

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Sugar Output Up 61%, Exporters Seek More Subsidy Support

Sugar production India rose over 61 percent to 73.77 lakh tonne till December, while  about 14 global sugar markets suffer from supply deficit in 2020-21 year. Sugar prices in India have been in a mixed range as S-Grade is hovering at Rs3,400-3,460 per quintal, while prices of S-30 and M-30 are moving up from Rs3,140 and Rs3,160 to Rs3,205 and Rs3,225 respectively.

The export subsidy is Rs6,000 per tonne. Sugar exporters urge the centre to offer more subsidy on sugar exports as they're feeling heat of high cost of transportation, freight, marketing and promotion activities. The domestic sugar industry is also urging the Centre to increase MSP of sugar, which was last time revised almost two years ago. Since the Centre has already increased the FRP of sugarcane by Rs10 per quintal for the current year, there is need to increase the MSP of sugar to Rs 34.50 per kg after considering the increased FRP of sugarcane for 2020-21 SS, said ISMA.

The Ex- mill sugar prices are under pressure in most of the States and to ensure that sugar mills  are able to pay to farmers on time, there is need to quickly decide on increasing the MSP of sugar. The late decision on MSP has already adversely affected the cane payment ability of the sugar  millers. The current cane price arrears are reported to be about Rs3,500 crore and if MSP is  not hiked, the arrears will jump very fast to uncomfortable levels, said ISMA.

Contrary to expectations about increase in sugar prices in 2019-20 due to substantially reduced output from India, the EU and Thailand, the coronavirus disrupted all the trade dynamics globally. Still sugar prices sluggish on Indian commodity bourse NCDEX. Sugar (Sugar M) spot price declined to Rs3,087.20 per quintal on January 15, 2021, from Rs3,188.75 on November 17, 2020.

The domestic sugar production rose over 40 per cent year-on-year (y-oy) to 110 lakh tonne in December quarter of 2020 from 78 lakh tonne in the previous corresponding quarter owing to higher yield in sugarcane crop in India more particularly Maharashtra, which alone contributes 40 lakh tonne followed by Uttar Pradesh (UP) with 34 lakh tonne.

Out of this, for over 10 lakh tonnes, exporters received orders from overseas markets. The Centre  has set an ambitious target of 60 lakh tonnes of sugar exports for 2020-21 marketing year, which  generally concludes with September. The NDA government is taking all possible measures to consume surplus stocks of sugar by exporting more.  Commodity market analysts see brighter opportunities for Indian sugar exporters as Thailand, world's second largest sugar exporting country, suffered drop in sugar production. India has more demand from Indonesia and Malaysia in addition to Middle East, Africa and our neighbouring countries. However, the futures contracts on global commodity bourses such as London ICE Exchange and New York exchange were trading lower. the March futures are under pressure and prices may decline in May futures, said a derivatives analyst. Forex volatility is further creating pressure for sugar exporters, says Indian Sugar Mills' Assocation (ISMA).

As many as 460 sugar mills were in operation till December 2020, and produced 73.77 lakh tonnes of sugar in the sugar season 2020-21 (October-September). This was higher by 27.96 lakh tonnes or 61 percent, when compared to the previous corresponding period, as per the data from ISMA, which further added that 412 mills were in operation in 2019 season.

According to ISMA, about 118 mills produced 22.60 lakh tonnes of sugar till December 15,  2020, in UP, 1.35 lakh tonnes higher than last year, when 119 sugar mills had together  produced 21.25 lakh tonnes.

As many as 173 sugar mills in Maharashtra were operational and produced 26.96 lakh tonnes of sugar till December 15, 2020. In 2019-20 SS, about 124 sugar mills were in operation as on December 15, 2019 and produced 7.66 lakh tonnes. The statement from ISMA further stated that the production was about 19.30 lakh tonnes higher than the last year figure on the corresponding date and attributes the reason to earlier commencement of crushing operations in Maharashtra and higher availability of sugarcane in this season.
Karnataka is the third largest sugar producer in India. About 64 sugar mills are operational and produced 16.65 lakh tonnes till December 15, 2020. The sugar production in Karnataka is 6.03 lakh tonnes higher than the last year sugar production of 10.62 lakh tonnes in 2019-20 SS as on December 15, 2019.

About 15 sugar mills in Gujarat are operational and produced 2.40 lakh tonnes of sugar till  December 15, 2020. In 2019-20 SS, as on December 15, 2019, when similar number of sugar mills were in operation and had produced 1.52 lakh tonnes of sugar till that date.

There are 10 sugar mills in operation in Tamil Nadu and sugar production till December 15, 2020, was about 0.8 lakh tonnes, as compared to 0.73 lakh tonnes produced by similar number of sugar mills as on December 15, 2019. Crushing operations in other parts of India also began and the pace of crushing is picking up. As many as 80 sugar mills are operating in other States who have collectively produced 4.36 lakh tonnes of sugar in this season upto December 15, 2020, which in the previous season was 4.03 lakh tonnes, when 81 mills were operating as on December 15, 2019.

As per trade and market sources, about 2.5 - 3 lakh tonnes of sugar have been physically exported in the current sugar season so far after 1st October 2020, which will be accounted for against the MAEQ of last season 2019-20 as the export policy for last year was extended upto 31st December' 2020, thus almost fully achieving the target of 60 lakh tons of sugar export for 2019 -20 SS, said ISMA in its statement.

Now, as the sugar export programme has been announced by the Government, the sugar industry is expected to respond in the similar manner as during the last year and is confident of achieving  the target of 60 lakh tons of sugar export, considering the demand from importing countries  like Indonesia, Malaysia etc, said ISMA.

The Finapolis Network

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