Sugar exports still low despite surplus stock

Sharath Chowdary

India is not only the second biggest producer of sugar but also one of the top sugar consumers in the world. With the increased prices in the country, the sugar merchants prefer selling in domestic markets rather than exporting to other countries, said experts from the industry. This is also because of the drought conditions prevailing in the country and low sugar prices globally.

The government has set a target to export 32 lakh tonnes sugar in this sugar season (1 October 2015 to 30 September 2016). Due to less production and higher domestic prices, the sugar mills have exported only 15 lakh tonnes sugar till now in this sugar season, Sanjeev Babar, Managing Director of Maharashtra State Cooperative Sugar Factories Federation told The Dollar Business Bureau.

Explaining the reasons for less exports of sugar from the country, he said, “The international sugar price is comparatively lower than the price in domestic market. There is a difference of Rs.5000-6000 per tonne in sugar prices in the global and local markets. Moreover, the production was also less due to drought in some parts of Maharashtra last year.”

“Last four years there was surplus production of sugar and 5.5 million tonnes sugar was available for trade anytime. This year started with an opening stock of 9.13 million tonnes from the previous season. We estimated sugar production of over 25.3 million tonnes in this season. India consumes roughly around 25 million tonnes sugar a year. So, we have sufficient stocks of sugar in the current sugar season also,” he informed.

Expressing similar views, Mukesh Kuvedia, Secretary General of Bombay Sugar Merchants Association said, “Indian sugar traders feel it viable to sell in the domestic market as global sugar prices are continuously low with a difference of $330-$400 per tonne. Also the beginning of sugar season in Brazil, the world’s top sugar producer, is also going to impact the sugar exports from our country,” he said.

Over 31 million tonnes of sugar stock is available during this sugar season against the domestic demand of 25.5 million tonnes. Around 23 - 24 million tonnes of sugar production is estimated with a carry forward stock of 7.3 million tonnes to the next sugar season. So, there will be surplus stock of sugar produced in India, the Ministry of Consumer Affairs, Food & Public Distribution said in a statement.

Though there are surplus sugar stocks available with the sugar merchants, the prices in wholesale and retail markets have increased in the country. Hence, the Cabinet has allowed the states to keep an eye on the available sugar stocks to check the price fluctuation in the domestic market.

The government has decided to bring sugar within the purview of stock limits to check the inflationary tendencies and to reduce hoarding by wholesalers and retailers. This decision will empower state agencies in regulating the storage, distribution and supply of sugar by curbing unfair trading.