Staring at a bumper crushing season next year, sugar mills plan to sign export contracts with neighbouring countries before the start of the next season. Mills are targeting 3-3.5 million tonnes (mt) exports of raw sugar to Bangladesh and China and another 2-2.5 mt of white sugar to Sri Lanka.
Maharashtra’s current sugar season officially ended on Wednesday with the last of the 187 mills ceasing operations. The state has produced 10.7 mt of sugar, the highest in the last 10 years. Maharashtra produced just 4.2 mt of sugar last year and the more than doubling of sugar production has literally thrown the economics of the mills to the winds. Sugar prices are hovering at Rs 25-26 per kg with mills running up to Rs 1,999 crore as arrears. With a bumper crop expected next year, mills have expressed reservations about their ability to pay the growers as sugar prices remain subdued.
In order to ensure economics of operations, mills have hinted at an early start to the crushing season. Instead of the customary post-Diwali start in November, mills are thinking of beginning crushing operations in October and producing just raw sugar for the first two months. Also, to avoid a glut in domestic markets, mills are in the process of signing contracts with Bangladesh and China for export of raw sugar and with Sri Lanka for export of white sugar.
The total export of raw sugar is expected to be 5-6 mt, which mills hope will keep sugar prices under reasonable limits in the domestic market and enable them to pay growers. Rohit Pawar, vice-president of the Indian Sugar Mills Association (ISMA), the apex body of private mills, said they have written to the government seeking help in terms of credit to enable exports.
Earlier, the central government had fixed an export quota of 2 mt of sugar for each mill in the country. Mills meeting the quota would be eligible for a subsidy of Rs 55 per tonne of cane crushed. The scheme failed to enthuse millers, who had pointed to the low international prices of sugar prevailing then. However, with Brazil’s production figures being revised due to diversion of ethanol as well as the ongoing moisture stress, international prices of white sugar have firmed up to Rs 20-20.5 per kg.
As mills get ready for exports, they are seeking a relaxation in one of the clauses they feel might hamper their move to claim subsidy. The clause in question mandates mills to have followed all necessary government orders for the 2017-18 season and many mills say they have not been able to follow the order for maintenance of minimum stock. “Most mills had already sold their sugar to raise money for paying the fair and remunerative price to growers and have failed to maintain stock,” said a miller from Pune.