May 15, 2019
Preeti Bhagat (Cogencis) | https://bit.ly/2YOyXux
NEW DELHI – At a time when Indian market is flooded with excess sugar, there seems no way out other than exports to get rid of the surplus. Exports of 7-8 mln tn is a must in 2019-20 (Oct-Sep) in order to bring about stability in the domestic market, industry officials said.
"In view of record-opening stocks and an estimated production of below 30 mln tn next season, 7-8 mln tn must be exported so that prices remain stable and to help in payment of cane dues," National Federation of Cooperative Sugar Factories Managing Director Prakash Naiknavare said.
Market sees sugar surplus in the domestic market at over 17 mln tn in 2018-19 due to record production of 33 mln tn.
India has the opportunity to perform better on the export front next season as the efforts made by the industry in 2018-19 will come handy.
"There were talks with delegations in South Korea, China, Bangladesh and Indonesia in 2018-19, but since commitments and contracts on government-to-government basis had already taken place, not much headway could be achieved… India was a little late in approaching," Naiknavare said.
In the last quarter of 2018, India had sent separate teams to Bangladesh, Malaysia, China, Indonesia and South Korea to explore the export of sugar on a government-to-government basis. The Indonesian government had inked a pact in February with its Indian counterpart to import up to 3 mln tn of raw sugar in a year.
Good quality of raw sugar compared with Brazil and Thailand is also likely to boost Indian exports of the sweetener.
"Apart from being very very high polarized, the free-flowing dextran-free grains (raw sugar) were preferred by refiners for better output… Freshly cut cane is taken for crushing in India, hence the quality advantage," one of the sources said.
However, exports are impossible without government subsidies due to lower global prices compared with domestic prices. Cost of production of sugar in India is higher compared with other producers which makes exports unviable.
So far, the industry has signed contracts for export of about 3.1 mln tn of sugar in 2018-19, of which 2.5-2.6 mln tn have already been shipped out, a senior government official said.