India’s raw sugar production witnessed a more than 24-fold surge until February-end in the current marketing year that started on October 1, as millers sought to gain from a subsidy offered by the government and cut a glut in refined sugar, industry data showed.
Consequently, the country exported 6,00,000 tonne of raw sugar until February-end this year from a paltry 3,000 tonne in the same period last year.
India’s raw sugar output hit 1.1 million tonne (mt) during October-February, compared with just 45,000 tonne from a year before, the latest data by the Indian Sugar Mills Association (ISMA) revealed.
The cabinet committee on economic affairs (CCEA) last month decided to offer a subsidy of R3,333 per tonne for raw sugar production, meant mainly for exports, to encourage mills to diversify their product basket to cut huge inventory of refined sugar and improve realisation. “The production has picked up particularly since the CCEA decision early last month to provide the subsidy. Moreover, raw sugar prices started picking up globally last month,” said a senior executive at a UP-based mill.
After falling for three straight months, the monthly average raw sugar price in New York moved up 6.8% in February, offering some relief to Indian mills struggling with plentiful supplies. Despite a projected 5.3% annual drop in India’s overall sugar production in 2013-14 to 23.80 mt, supplies have been abundant as output is expected to exceed consumption for a fourth straight year through 2013-14.
Besides raw sugar, the country exported 5,20,000 tonne of refined sugar during October-February, sharply higher than just 17,000 tonne a year before. Depressed global sugar prices were the main reason for India’s inability to export much sugar, both raw and refined, in 2012-13, especially in view of high state-fixed cane prices in key producing states, mainly UP.
Despite a downward revision in output, sugar supplies would continue to be ample as the country had started the current year with stocks of 10.77 mt, up from 9.27 mt a year before. The opening stocks of 2013-14 were the highest since 11.03 mt in 2006-07. As much as 10 mt of sugar has been released by mills between October and February this marketing year for sale in the domestic market, compared with 9.6 mt a year before.
According to senior industry executives, mills could export 1-1.5 mt of raw sugar in 2013-14 out of the 4 mt for which the government has allowed the subsidy. ISMA director-general Abinash Verma last month said since the window to produce raw sugar for exports this season is roughly two months (cane crushing is mostly over by end-April), mills won’t be able to produce more than 1.5 mt.
Had the decision been taken in December itself when a panel led by agriculture minister Sharad Pawar had first mooted the dole-out, the industry would have been able to ship out 2-2.5 mt, Verma said.
