ISMA seeks food ministry’s nod to export additional 1 million tonne of sugar

July 20, 2022
Financial Express |

Industry body Indian Sugar Mills Association (ISMA) has once again requested the Centre to allow sugar mills to export an additional 1 million tonne (MT) of sugar in the current season (2021-22) so that the sugar mills can fulfil their export commitments for this season itself and there are no repercussions in the next season.

In a letter to the food secretary on Monday, ISMA president Aditya Jhunjhunwala said that based on the contracts already signed, the sugar mills had applied for an export of 1.7 MT, but export release orders (EROs) were issued for only 0.8 MT.

“You would know that the current season has ended in almost all states and planning for production of raw sugar for exports is done in advance based on the export contracts. This would mean that almost 0.6-0.7 MT of raw sugar would be surplus and lying idle with the sugar mills or at the ports,” Jhunjhunwala has written.

He adds that the mills, which have already manufactured raw sugar, now have no option as they cannot convert the same into white sugar as their crushing operations have concluded for the season. Therefore the mills can neither process the same nor sell it in the market.

“In the current situation, export is the only viable option left for raw sugar,” he said, adding that since export orders were issued for part contracts, it will also lead to further complications like litigation and loss due to hedging. The goodwill of sugar mills as also the country will be at stake due to the non-fulfilment of the contracts, he stated.

India is the world’s biggest producer of sugar and the second largest exporter after Brazil. In May, the government said that it had decided to limit sugar exports to 10 MT for the current marketing season to keep prices in check.

Allaying the government’s fears of a shortfall of sugar in the country and the consequent increase in prices, the letter added that even after record exports of around 8.6 MT till May-end, the all-India average domestic ex-mill sugar prices have not increased much and are hovering around Rs 32-35 per kg, which is still below the cost of production of sugar.

“Due to better cane availability for the next season, it is reported that the next season will commence from October 1 in Maharashtra and availability of the new sugar will be available in the market,” the letter stated.