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Publication: The Indian Expressl Edition: Ahlnedabad Date: Novelnber 21,20191 Page No: 091Food & Agriculture
HARISH DAMODARAN HU .. C'ElI11. NOV EM BER ZO
FOR TilE In cl ian sligar industry. the WOrl!
seems wcr. ,\Ithoogh the curn?nt 2019-20 sugar year
(Oclllbcr-Scptcmber) h~opcned .... 1th fl:(ord s[(xksofover 14 milliooronnes (mtj-equivalent to six-and-a-half months of domestic consu mpuon -the ray of hope is from tightcnong global su pplies. making larxe-sGlle expons from the rounrry J viable proPOSItion.
In 2018- 19. India 's sugar output as well ilS closin~ StOli<S hit all·time-highs <i 33.16 rnt and 14.27 mt. respecti~ ly [see table 1). ·Ihis. inordinaryrircumsrances. would have spe iled disastaboth for mill, (alre.dy burdened bylowsugar realis aoons)and farmers : net receiving full or time Iy payme nt fort heir c.lnc ). Mill s in Utta r Pradesh (UP ). as on November 19. are to still pay Rs 3.660.90 crore out of the IOtal Rs 33.048.03 crore v\'orth ofea ncbought from ~romrs in 2018-19. even as they have commenced crushirut lOr th<.· new 20·19-20 ;cason
Out this gloomy domestic glm scenario - mmpoon<ied bynear-Ilat consumption 10
I~cent years. apparently n?nectingglUwing he.l!th consciousness and reduced offtake bv indust ria l use rs. induding beverage. s\o,·ee nnea ~ choroklte.confectionery. bis("uit and ice-cream makers - is being partlyoff· set by a developinj(global dertcit.
The US·basedcommodity.Jnalytics firm Tropical flL: search Services· has projected world raw sligar productton in 2019-20 to fall shon of consumption by 11 .90 mt. a marked llltnaround from the surplus of 10.52 mtonlyrwoyears ago.Moreoyer.c1osing stocks , at 432% 0( consumption. v.uuld be t he lowest since 2010-11 (see rable 2j.
"rhis b a grea t opponunity for us to cxpon and it rouldn't have come at a bener time. when we aresaddledwith so much of stocks." says PrakdS h Naiknavarc . rna naging di rector of the National r-ederation of C(loperative Sugar Factortes.
Sug'lI expom from India amounted to 3.8 mt in 2018-1 9, lower than ule rargeted 5 mt. forthecurrent sugarYl'ar. the Narendra Modi ~O'Iernmemha s allocated export quotas to mills aggregating 6 mt. apart from g rantin ~ a three-month extension till {),cember 31 to discharge their balan"" 1.2 ml commirmcnt for20IS-19.Together. they add up to ·/2 mt, way above the highest -ever shi pments 0(4.9f) mtathieved in 2007·08.
··It is astiHlawt "admits Naiknavan? ··but the gooct thing is that the international marl<et looks much more cOflducive and the y:JV
cromen t has ann ou need an adequate export incentrve well before the start of this season '", ·the Modi gavcmmem. mScptember 12.notined a new 'Wor kl Trade Organisation (WTO )-compatible · scheme providing a lump-sum assislanO? totaling Rs 10.448 per toone t(MII rds rna rl<cting. internal transport. port h andli ng and DO: an freight expense s inl1JITed onexpon: of sugar. '[he scheme, lim ited ID the IThlXI mum admissible exportquan· tity Ofb on for all mills. woulde nrail a fisca l cost of about Rs 6.269 crore .
La.st year. the noofieatioo for facilitating exports was issued only on October 5. Further. the in cent ive package included an assistance of Rs 13.88 fo r every quintal of cane rrushefl and a payment to defray expenditure ttMartis internal transport freight handling .1nd other exporr.rclateitctlarxes. ·Ihe latter payment was lip to Rs 1.000 per tonne of sugar for mills located 'A1thin 100 km from pomaRd Rs 3.000ltonneforthose beyond 100 kmin non-coastal states.
·· It was too com plicaled. with procedural hurdles and excessive documentation requi reme nts for making claims. The new srheme issimple :Yousimplyexporrand ge t a flat incentive t>f Rs 10.448 tOr every kg of sugargtlngoul.Also. what is beinggiven is a lump-sum assisrance and not reimbursen~ntofacmalexpenses. which can be chal· lenged at the WTO. And it has been an· Iloonu.'<i early enough to plan our proctuction forexpom .. · notes a UP-based mIller.
India n mill s. il is learn ed. have already
GLOBAL OPPORTUNITY
Shipping out trouble India's sugarexpOlts are set to hit a record high this year, providing some
respite to the beleaguered industry
. ',,,. 'f"ir'Ii'-!in"' lg-' ~'n~"i~lt~ ' i ri~i~I"~i.~'·i" "i"'_~ "'-w ', • 2010-\1 24394 0 207.69 26.00 57.29
2011 -12 263.43 0 220.00 33.90 66.82
20U-13 251.41 7.25 230.00 3A8 92
2013-14 243.6 1177 244.27 27.82 75.28
2014-15 28113 1236 256.55 23.02 91.2
2015-16 251.25 0 2485 16.~ 77.25
2016-17 202.62 4.48 244.48 0.46 39Al
2017-18 323.28 2.24 254.50 632 104.11
2018·19 331.61 0 255.00 , 38.00 142.72 ·Orwber·Seprembi'r, •• Yeur-em/. SOlltl."t': NCJ bona I "'t'de ttl t ion c.(Cooperudvc SUb'CIr kKcorio
e on mnp on otp 0
(1) (2) (1-2) -Use:\>
2010-11 166827 166.142 0.685
5.297
42.9
45.1 2011-12
2012-13
2013-14 2014-15 2015-16
2016·17 2017-18
2018·19
2019-20
174.190
183.318
181533 181.853 175.082 178,329
193.702 185.110
175.682
168.893
172 .779
176.388
179.350 18113O
181.807 183.177 185.089
187582
10.539 49.8
5.145 Sl .6
2.504 51.7 -6.248 47.7
-3.479 45.6 10.524 SO.7 0.021 50.2
-11899 43.2 Source: Irupil..T.l l ~rch Scrvi::('.s
contracted 13 mtofsugarforexports during this season. A significant quantity ofitlS raw brown. as opposed to white refined. sugar. The normal crystal white sugar producedby tndian mills hasan 'ICUMSA value' of OllCr 100. The markPt for it is limited. unlike the more 'A1 dely traded highly,efi ned sugar of 45 ICUMSA grade (the 10Wl' r the ICUMSA. the more the whiteness ).
"Our r;m sligar (rom fresh cane. crushed 'A1thin 12 hours ofharvesring. is free of dextTan (an undes irable compound resulti ng from microorganism·induced biodeterioration)and "i th GOO-l.000 ICUMSA. There IS a good demand now/or it.esper:iallyfrom re-
fi neries in United Alab Emirares . lndonesia. Malaysia. Bangladesh. China and South Korea that largely source Brazili an raw sugar. Since the Brazilian sugar season startsoniy in April-May. _ have a six-month time 'A1lldow to leverage:· points out Nailmavare.
Iran . too. is reportedly buying significant quantities from India. The I.slamic republic; which has ~n blocl<ecllrom the global n .. nanciab-ystem due to US-impascd economic sanctions. is using the rupees earned from sale <i oil toimport sugar. rice. tea. sayabean mealandothercommodilics from India.
··l'verythmg's falling in pLlce. Not only are we in a better position ro aport butt he gov-
errunentalsodese"", s credit forcomingoul with d practical and well-timed in~entive scheme. It allows us to begin the season by producing raw sugar andenr.,r into back-toback contr am with importers: observes the earlier-quOled UP mil ler. Even in Maharashtra, the delayed stan due to hea"Yunseasonal rains - mills wiU crush only from Novem ber n - maybe a b1essingofsorts.asitgives leeway to take up production of raw sugar maighGlwayfor dispatching to the ports rather than storing i n factolY godown s.
Raw sugar is currently trading in New York at roughly 12 .8 cents per pound. The rate would be higher. at 13.3 cents or Rs 21/kg. for Indian sugar, which fell:hes a 4.05% ·polarisation premium· rorextra suo crose content Adding the Rs 10.5 incentive and deducting Rs 2-2.5 towards bagging. transport and port handling chaljles. mills wauld rea~se Rs 29-295 per kg from exports. Thb is bekm thedornesticex-factorypr~ of Rs 315-32.5 for white sugar. But raw sugar production costs ate also Icmer by R.5 l lkgor so. as mills save on lime. sulphur and add;' tiona I steam-cum-p.rocessing charges . Besides. thegovemment rOO!S monthly quo· tas ~r sales in the domestic market whereas there are no such restrictions on export of sugar. Fasterliquidation translares into sav· ings in imerest and GlrlYing costs as well .
The im proved pros peas for cXPlXts. however. donot tr.Inslateinroan end rotheindustry's woes. The srate advised pri"" (SAP) for sugarcane in UPh as gone up only marginally from Rs 300-315 to Rs 310-325 per quintal be~en2016- 17 and201S·19. with mills struggling to p,¥even that The VogiAdityanath administration has net declared the SAP for the current season. despite 87 out of the state's 119 mills already crushing 5.85 mt of cane and producing 0.58 mtofsugar till now.
In Maharashtra . drought in the Marathwada-Solapur-Ahmednagar region till August, atongside unprecedented flooding in the main southern sugar beltofSang~Kolhapur du ring Iate-julylearly-l'ugust and heavy unseasonal rains across the state afterSeptember, hastakPn a heavy toll on producoon itself. Maharashlra's sugar outputis likely to pi unge to 5.5-6 mt in 2018-19. irom last Yl'ar's record 10.72 ml
I'or the moment. exports arc the so le bright spot (or Indiansugar.