Sugar industry pushes for export freedom

NEW DELHI: The sugar industry has demanded a long-term policy to enable it to export regularly irrespective of variations in output. It mentioned that the irregular nature of sugar shipments from India is resulting in a low price realisation.

“Usually, importing countries do not look upon the Indian exporters as a reliable long-term supplier. So, Indian exporters suffer from that is reflected in the price realisation for Indian sugar,” Indian Sugar Mills Association (Isma) director-general SL Jain said.

Mr Jain said Indian sugar sells at a discount of almost $100 per tonne against the international price. Though it is admittedly a bit inferior quality than the refined sugar abroad, the huge price variation is not justified, he said.
The Centre in 2006 had banned export of sugar that was lifted in January 2007 after a gap of six months, though India produced a record output of 28.3 mn tonnes in the 2006-07 season (October-September).

The ban in the first crucial three months had badly affected exports in 2006-07 season and the overall shipment in the entire season was 1.8 mn tonnes. The industry has suggested that a piece of legislation be framed by the government, providing for a minimum export of sugar per annum, irrespective of variations in the indigenous sugar production.

“While prescribing such minimum obligation on individual basis, it should be left to the sugar factories to make additional exports, should they so desire,” said Mr Jain.

The industry has also demanded that export quotas, whenever fixed, be provided with a tradable character. Since factories in the non-coastal regions have to incur higher transportation and incidental cost to undertake exports, the tradable character of exports quota would facilitate such mills to negotiate with units located in coastal areas to fulfil shipment obligations.

In such a scenario, sugar mills in the coastal areas may export on behalf of their hinterland counterparts, or units located in distant places may also buy sugar from the coastal units and fulfil exports obligations. India is the second largest sugar producer in the world, next only to Brazil, and the largest consumer of the sweetener. Sugar production in 2008-09 season is estimated to touch 22 mn tonnes, while in 2009-10 it is expected to be 25 mn tonnes. The domestic demand, at present, is pegged at about 21 mn tonnes.

Meanwhile, industry experts fear that sugar exports may fall by over 60% to about 1.5 mn tonnes in the 2008-09 season on expectation of lower production coupled with rising domestic prices.

“The domestic prices have gone up while the global market has softened. Besides, the estimated lower production would also be one of the factors for the decline in exports next season,” an analyst said.
thanks to :-economictimes.indiatimes.com