Maharashtra sugar millers aim to capitalise on global prices
Sugar export from Maharashtra, which has been lagging since the start of the season, is expected to pick up the pace as international sugar prices have substantially firmed up. Bhairavnath B Thombare, president of the West Indian Sugar Mills Association (WISMA), told that said he foresaw India crossing the 50 lakh tonne (lt) mark in sugar exports this year.
After two years of surplus sugar production, the world sugar market has entered a period of deficit, with the International Sugar Organisation (ISO) talking about about a 55-lt dip for the 2019-20 (November-October) crushing season. Production drops in India, Thailand and European Unions led to this dip. India, sugar traders said, had started the season with surplus stock of over 145 lt, and this dip in production in the world market can allow the country to export its excess stock.
In order to help mills generate liquidity to pay cane farmers, the government declared a Fair and Remunerative Price (FRP) for cane purchased, and the Centre had announced an incentive-based scheme for sugar exports. Millers were given a target of 60 lt for the current season, and taking into consideration the 10 lt carried forward from the last season, India is looking to ship out 70 lt for the current season. Under the scheme, mills were eligible for Rs 10,448 per tonne of sugar exported, which was to be paid directly into the accounts of farmers.
Since the start of the season, a majority of the exports have been bagged by millers in Uttar Pradesh, while those in Maharashtra and other states have fallen behind. Of the contracts finalised for a total of 30 lt, about 20 lt were cornered by UP mills, of which 16 lt was shipped by the end of January.
Mills in Maharashtra had complained of non-payment of a previous subsidy of about Rs 900 crore, as well as liquidity crunch for them not taking to export their stock. However, as international prices spike and the government takes measures to release pending subsidies, millers also look forward to increasing their exports. “At present, raw sugar prices have crossed the psychological 15-cent barrier and white sugar prices are at Rs 430 per tonne. In the case of white sugar, if one takes into consideration the subsidy, our realisations come to about Rs 3,400-3,500 per quintal,” he said.
This, both Thombare and Mukesh Kuvadiya, general secretary of the Bombay Sugar Merchants Association, said, was better than the Rs 3,100-3,200 per quintal prices mills are realising in domestic markets.
With prices picking up, millers are hopeful that they will be able to ship out excess stock before the start of the 2020-21 season.