New Delhi [India], March 3 (ANI): India will easily exhaust its 1 million tonne sugar export quota allowed by the government for the current marketing year, Deepak Ballani, Director General of Indian Sugar and Bio-Energy Manufacturers Association (ISMA) told ANI.
Sugar marketing season in India runs from October to September.
“We have already done export (physical plus contracts) of about 600,000-700,000 tonne. We have a large window till September…and I think in another two months we shall be able to finish our 1 million export quota,” Ballani said in a telephonic interview on Monday afternoon.
After restricting the sugar trade in the 2023-24 season, the central government allowed sugar producers to export 1 million tonnes of sweetener on January 21 this year.
The government restricted sugar exports in the previous year, presumably to maintain price stability in domestic markets.
Asked whether the industry body ISMA would ask the government for an additional export quota once the 1 million tonne of exports is realised, Ballani, in definitive word, said, “No”
“We want to complete the exports for which the government has allowed us,” he said, referring to the 1 million tonne quota. “Next season, we are expecting a very good crop. We will then discuss with the government. Right now, we are not seeking more quota.”
According to Ballani, higher opening stock has made the overall sugar availability comfortable across the country, and that is what has prompted the government to open the export avenues for the producers.
The government’s priorities are domestic consumption, followed by the ethanol blending programme, and then finally the exports.
According to him, the opening stock of the 2024-25 marketing season was 80 lakh tonnes. The sugar production estimate for 2024-25 is 272 lakh tonnes, which is some 15 per cent lower year-on-year from 320 lakh tonnes produced in 2023-24.
The opening stock of 80 lakh tonnes and 272 lakh tonnes of estimated production will bring the total sugar availability to 352 lakh tonnes in 2024-25. India consumes around 280 lakh tonnes of sugar annually.
Going by that calculation, Ballani explained that India would still have some 70-odd lakh tonnes of sugar available as opening stock for the next marketing season.
He reiterated that the additional sugar availability has led the government to allow the exports of the sweetener.
“Even after the 10 lakh tonne exports, India will close the season at 60 lakh tonne. Normally, the government wants to keep 50-55 lakh tonne as a normal closing stock. Even after allowing exports, we will still have a higher closing stock. That is why the government has allowed the exports,” he supplemented.
Maharashtra, Uttar Pradesh, Karnataka, Gujarat, and Tamil Nadu are the major sugar-producing states in India. India is the second-largest producer of sugar after Brazil.
The ISMA DG also spoke at length about the sugar prices in India and how they have lagged the pace at which the Fair Remunerative Price has moved.
At the moment, the ex-mill price of sugar in Maharashtra is Rs 3,800 per quintal, and in Uttar Pradesh at Rs 4,000-4,050 per quintal.
Ballani expects the domestic sugar market to be firm in the near term, with a price range of Rs 4000-4100 per quintal.
According to Ballani, the FRP of sugar has increased at a CAGR of 5.5 per cent since 2014.
FRP, set by the government every year, is paid to farmers by the mills.
At the same time, the prices of sugar have increased just by 2 percent CAGR over the past 10 years, he said. The average retail price of sugar has been almost stagnant for the past two years.
He also pointed out that the Minimum Selling Price of sugar has not been revised in the last five years. In 2019, it was set at Rs 31 per kg, against the estimated cost of sugar production of Rs 41.
“We are still below the cost of production. For us to maintain our payment to the farmers, for investments, to make sure our industry is viable, we need a decent and reasonable sugar price as well,” he said.
He argued that India pays the highest rates to sugarcane farmers in the world but realises the lowest prices for the end product–sugar.
Faced with this crisis, Indian sugar producers are increasingly diverting sugarcane juice and sugar syrup towards ethanol production.
He said the diversion of sugarcane juice and sugar syrup gives the industry some balance and stability. “Ethanol has given some stability to the sugar mills.”
Notably, it is the government which decides how much sugarcane can be diverted towards ethanol.
When asked what else could be done, besides diverting more sugarcane towards ethanol, to boost the mills and make them more viable, he said diversification to other products is the way out.
He also suggested that the government revise ethanol prices in line with the rise in sugar’s FRP prices.
“Without the revision of ethanol prices, the industry will become unviable,” he argued. “We also need to diversify into various other products.”
For example, he highlighted how ISMA is already doing a pilot on green hydrogen using bagasse. They are also working on sustainable aviation fuel and compressed biogas projects.
The central government has mandated 1 per cent sustainable fuel in the aviation sector by 2027.
“There are 3-4 areas where we are working very closely, and we are expecting good supportive policy from the government so that we can also diversify into other products to make the industry more viable,” he supplemented. (ANI)
