Food ministry mulls curb on sugar export after 2 mt

FE BUREAU
Posted: Saturday, Jun 09, 2012
New Delhi: The food ministry is mulling a curb on sugar exports after the shipment hits two million tonne to keep domestic supplies steady, a senior official said, although there is no specific time frame to impose the restriction.

“Sugar exports have been put under the open general licence, but that doesn’t mean we can allow unbridled exports indefinitely. So we will think as soon as exports hit two million tonne, we can take a pause, review domestic supplies based on possible production for the next year (starting October) and again decide on further exports,” said the official, who didn’t want to be named.

“(However) If the ceiling doesn’t get hit this marketing year (through September), we can allow it for a longer period without curbs,” he added. It’s extremely difficult, however, to hit the ceiling of two million tonne in 2011-12, as the country usually ships an average 3 million tonne of sugar a month. The commerce ministry has granted registration certificates for export of about 3,30,000 tonne of sugar since early May when the government decided to free sugar shipments, according to Indian Sugar Mills Association (Isma).

Any restriction on sugar exports will need to be approved by the empowered group of ministers, headed by finance minister Pranab Mukherjee. However, curbing sugar exports will be difficult for the food ministry if production prospects look bright in 2012-13, as agriculture minister Sharad Pawar, a key member of the EGoM, has been favouring the free export policy to boost farmers’ earnings.

India, the world’s second-largest sugar producer, had allowed shipments of two million tonne in 2011-12, prior to lifting the restrictions last month, to help mills clear payments to farmers for previous cane purchases.

The country has allowed exports in 2011-12, as domestic supplies have exceeded demand for a second straight year. India’s sugar output jumped 8% until end-May to 25.5 million tonne due to higher cane crushing. Isma has forecast production to rise to 26 million tonne, compared with the expected consumption of around 21.5 million tonne.

The government had permitted 1.5 million tonne under the open general licences last year in three equal tranches, starting April 2011, after a gap of two years when it faced a shortage.

Industry executives had said sugar mills lost out on a chance to maximise export returns by cashing in on soaring global prices in February and March last year due to the late decision by the government. They often blame low sales realisation in the domestic market and the lack of a clear export policy for non-payment of arrears to farmers for cane purchases.

US raw sugar futures crashed 27% in 2011, the first annual fall in four years, on higher output in Asia and Europe, although exports are still more remunerative for Indian mills as domestic wholesale prices have remained subdued more than seven months now due to adequate supplies. Ex-factory sugar prices in Chennai remained stable at R3,000 a quintal on Friday.