The Indian Sugar Mills Association (ISMA) has stated that mills should be allowed to export an additional 1 million tonnes of sugar during the current marketing season, which runs from October 2021 to September 2022, in response to the government’s decision to limit sugar exports starting June 1.
They claim that shipments are the only realistic option for raw sugar produced this season.
ISMA president Aditya Jhunjhunwala said in a letter to the food secretary on Friday that based on the government’s advice, a substantial number of sugar mills had signed contracts for export dispatches and had sought export visas.
He also stated that the production of raw sugar for export is planned in advance depending on the export contracts. Because export orders are not issued for the complete contracted quantity of sugar, sugar mills have surplus raw sugar. Mills are unable to convert raw sugar supplies to white sugar because crushing activities for the season have been completed.
India, the world’s second-largest sugar producer, shipped 3.06 million tonnes of the sweetener until June 2 this fiscal year, a 53 percent increase over the previous year. The extraordinary spike gives credence to the government’s concerns that sugar inventories may be significantly depleted by the holiday season if outbound shipments were unrestricted.
Official figures show that the government, which capped sugar exports for the current marketing year through September at 10 million tonnes on May 24, has transported far more raw sugar than refined sugar since April. In May, it exported one million tonnes of raw sugar, much above 0.42 million tonnes of refined sugar. It shipped 0.73 million tonnes of raw sugar and 0.71 million tonnes of refined sugar in April.
However, ISMA stated that because export orders were issued for part contracts, the restrictions would also result in issues such as litigation and hedging losses. Furthermore, the goodwill of sugar mills, as well as the country, will be jeopardized if the obligations are not fulfilled.
ISMA recently updated its sugar output predictions from 35 million tonnes to 36 million tonnes, owing mostly to increased cane availability in Maharashtra, Karnataka, and Tamil Nadu.
The letter noted that despite record exports of over 8.6 million tonnes up to the end of May, the all-India average domestic ex-mill sugar prices have not increased significantly and are lingering around 33-34 per kg, which is still below the cost of production of sugar.
Given the increased expected sugar production, we respectfully urge that you enable the sugar industry to export an additional 1 million tonnes of sugar during the current season. This will have no effect on the domestic sugar situation and will leave enough sugar to cover the country’s demands for at least two and a half months into the next season, which begins on October 1, 2022.