In order to balance the interests of its farmers and consumers, India, the world’s biggest producer of sweeteners, is set to allow Sugar Exports in 2 tranches for the next season that begins in October and is likely to cut the sugar export quota by 29% for this marketing year.
Food Secretary, Sudhanshu Pandey said on 21st September 2022 that, “the government will very soon announce the export quota of sugar for the next marketing year starting October.” Although the number of sugar exports to be allowed for the 2022-23 marketing year wasn’t disclosed, this was mentioned at a Sugar and Ethanol conference organized by the Indian Sugar Mills Association (ISMA) and datagro. India’s sugar exports stood at 3.8 million tonnes(MT) in 2018-19, 5.9MT in 2019-20, and 7MT in 2020-21.
Government’s Sugar Export Policy
The government imposed restrictions on the export of sugar beyond 10MT in May 2022 but later allowed the export of another 1.2MT making a total of 11.2MT for the 2021-22 marketing year. Sugar exports could be capped at just 8 million tonnes in 2022-23, lower in comparison to the previous year out of which the Government is likely to first allow 4-5 million tonnes of exports in the first tranche which would be followed by the 2nd thus unlike the previous years.**
The policy to be adopted could either be the system prevalent in 2020-21 or under the Open General Licence(OGL) system in the 2021-22 season. The Food Secretary said that both the systems have been tested and are successful and no other third system should be applied. In this context, he further added that the export of 8MT of the commodity is very important for the sugar industry. The food ministry will soon take a call on the policy to be adopted. He further added that the sugar sector has performed very well in the last few years of production, exports, and ethanol supply while taking the help of favorable government policies.
Current Requirement Of The Policy
Exports of surplus sugar would help in maintaining domestic sugar prices, which in turn would boost the liquidity position of mills enabling them to pay sugarcane farmers on time.
The Food Secretary assured the sugar industry that the government will look into their demand related to export quota, MSP, and ethanol rates for the next marketing year. The government is urged to announce the policy at the earliest so that mills could enter into futures contracts and plan their production in advance. Due to huge sugarcane availability, the sugarcane crushing operations are expected to start from October first week of 2022-23. As per estimates of the ISMA, net sugar production after diverting cane juice for ethanol would be about 35.5 million tonnes, whereas consumption would be around 27.5 million tonnes leaving scope for exporting 8 million tonnes without disturbing domestic carryover of 6 million tonnes*. Deals have been signed by a few traders to export 300,000 tonnes of raw sugar in the coming season owing to higher global prices and a weak rupee currency and therefore mills have been advised to sign export contracts before the government announcements.**
