ChiniMandi Exclusive: If Minimum Selling Price Of Sugar Increases, This Is How Exports Would Slowdown

India’s sugar exports seem to be lower than the target set with the incline of the strengthening rupee and falling global prices making shipments unattractive despite a government push for overseas sales by offering various measures to the sugar industry. The government seems to be disappointed seeing the piling cane arrears which have already reached somewhere around ₹15000 crores in comparison of ₹10000 crores last year during the same time.

Millers have been unable to export due to the issue of short margin which is already on a verge to be solved. The State Co-operative Bank has decided to give a bridge loan to mills in the state against export subsidy receivables from the Centre. This will enable banks to release a large amount of sugar stocks mortgaged by mills for export.

Now at this time when the industry has sky high expectations on the increase in Minimum Selling Price (MSP), on the other side the industry yet seems to be unwitnessed to the fact that if the MSP is increased, the price of export parity will be disturbed.

While exclusively speaking with ChiniMandi.com, Prakash Naiknavare, Managing Director of National Federation of Cooperative Sugar Factories Ltd, said, “Yes, there are two parts in this, if the MSP is hiked, the price parity will be harmed, yet having said that there is still an opportunity window if export contracts are made for the deliveries for March/April before the sugar from Brazil and Australia reaches to the market. At this point when we are looking at the figures of the cane arrears during the election year too, there is a need to improve the cash liquidity at the mill level, and the only way to increase this is through a hike in the MSP. Now when we are looking at how to create a balance in this situation, a golden mean could be achieved by increasing the MSP as well as compelling millers to export even at a loss.”

“The government has already taken rightful steps in the direction towards compulsory exports and warned the millers through the notification of the monthly release mechanism. Ideally, if the MSP is increased and on the other, the millers are strictly compelled for exporting sugar, this would prove to be a golden mean in improving the current scenario of the industry.” he further added.

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