Sugar export cap to check price spike, ensure availability

The government on Wednesday said that the decision to cap sugar exports in the 2021-22 season (October-September) at 10 million tonne (MT) is to ensure adequate domestic availability of sweetener and prevent undue spike in prices.

Food secretary Sudhanshu Pandey on Wednesday said while domestic prices of sugar are more stable compared to other commodities, the decision to curb sugar exports was taken to prevent any undue spike in retail prices amid global shortage of the commodity. India has emerged as the world’s largest sugar producer this year as output in Brazil has declined.

While notifying the capping of sugar exports, the government said shipments will be allowed with special permission between June 1 and October 31. Sugar mills and exporters need to take approvals in the form of export release orders from the directorate of sugar, food ministry.

Around 9 MT of sugar have been contracted so far, out of which 7.5 MT have been exported. In the 2020-21 season, India exported 7 MT of sugar. “Global situation reflects a shortage of sugar, especially due to lower production in Brazil. This may trigger the demand globally and so as to safeguard domestic availability and interests, the decision to cap sugar exports was made,” the food ministry said in a statement.

The curb on exports is expected to ensure adequate availability of sugar during the festival season in October-November. While the sugar season starts from October, the sweetner enters the market after crushing by companies only by November.

“About 6-6.2 MT of sugar would be the closing stock at the end of the current marketing year, just the optimum level to meet the domestic requirement in October-November,” Pandey said. On October 1, 2021, the opening stock of sugar was around 8 MT.

While ex-mill prices of sugar are ruling at Rs 32-33 per kg, the retail prices are hovering between Rs 33 and Rs 44 per kg depending on the region, according to the food ministry.

India’s sugar production is estimated at 35.5 MT for 2021-22 season. After taking into account the diversion of 3.5 MT for ethanol, the availability is higher than the annual domestic requirement of 27.8 MT.

The food ministry stated that more than 99.6% of cane arrears of the last sugar season have already been paid and more than 84% of cane dues of the current sugar season have also been cleared. It stated that the number of operational sugar mills has also increased to 522 in the current season.

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