New Delhi: India is set to fully utilize its sugar export quota of 1 million tonnes for the current marketing year, as stated by Deepak Ballani, Director General of the Indian Sugar and Bio-Energy Manufacturers Association (ISMA), in an interview with ANI.
The sugar marketing season in India spans from October to September.
"We have already exported (including physical shipments and contracts) approximately 600,000 to 700,000 tonnes. With a significant timeframe remaining until September, I believe we will complete our 1 million tonne export quota in the next two months," Ballani mentioned during a phone interview on Monday afternoon.
Following restrictions on sugar trade for the 2023-24 season, the central government permitted sugar producers to export 1 million tonnes of sugar on January 21 of this year.
The government had previously limited sugar exports to stabilize domestic market prices.
When asked if ISMA would request an additional export quota after reaching the 1 million tonne limit, Ballani firmly responded, "No."
"We aim to fulfill the exports permitted by the government," he clarified, referring to the 1 million tonne quota. "We anticipate a strong crop next season, and we will engage with the government then. At this moment, we are not pursuing an increased quota."
Ballani noted that the higher opening stock has ensured a comfortable sugar supply nationwide, which has led the government to open export opportunities for producers. The government's priorities focus first on domestic consumption, followed by the ethanol blending program, and finally on exports.
The initial stock for the 2024-25 marketing season is projected to be 80 lakh tonnes. The anticipated sugar production for this period is estimated at 272 lakh tonnes, reflecting a decrease of approximately 15 percent compared to the 320 lakh tonnes produced in the previous 2023-24 season.
With an opening stock of 80 lakh tonnes and an estimated production of 272 lakh tonnes, the total sugar availability for 2024-25 is expected to reach 352 lakh tonnes. India's annual sugar consumption is around 280 lakh tonnes.
Based on these figures, Ballani noted that India would have approximately 70 lakh tonnes of sugar remaining as opening stock for the subsequent marketing season.
He emphasized that the surplus sugar availability has prompted the government to permit exports of the commodity.
"Even after accounting for the 10 lakh tonnes of exports, India will conclude the season with a closing stock of 60 lakh tonnes. Typically, the government aims to maintain a closing stock of 50-55 lakh tonnes. Thus, even with the exports, we will still have a higher closing stock, which is why the government has sanctioned the exports," he added.
The primary sugar-producing states in India include Maharashtra, Uttar Pradesh, Karnataka, Gujarat, and Tamil Nadu. India ranks as the second-largest sugar producer globally, following Brazil.
The ISMA Director General also discussed the current sugar prices in India, highlighting that they have not kept pace with the increases in the Fair Remunerative Price.
Currently, the ex-mill price of sugar stands at Rs 3,800 per quintal in Maharashtra and between Rs 4,000 and Rs 4,050 per quintal in Uttar Pradesh.
Ballani anticipates that the domestic sugar market will remain stable in the near future, with prices expected to range between Rs 4,000 and Rs 4,100 per quintal.
According to Ballani, the Fair and Remunerative Price (FRP) for sugar has experienced a compound annual growth rate (CAGR) of 5.5 percent since 2014. This price, determined annually by the government, is what mills pay to farmers.
In contrast, sugar prices have only risen by a CAGR of 2 percent over the past decade, with the average retail price remaining relatively unchanged for the last two years. He noted that the Minimum Selling Price of sugar has not been updated in five years, having been set at Rs 31 per kg in 2019, while the estimated production cost stands at Rs 41.
"We are still operating below the production cost. To ensure we can continue paying farmers, invest in our operations, and maintain industry viability, we require a fair and reasonable price for sugar," he stated.
He emphasized that while India offers the highest compensation to sugarcane farmers globally, it receives the lowest prices for sugar as a final product.
In response to this challenging situation, Indian sugar producers are increasingly channeling sugarcane juice and syrup into ethanol production. He mentioned that this diversion helps provide balance and stability to the industry, stating, "Ethanol has brought some stability to the sugar mills."
It is important to note that the government regulates the amount of sugarcane that can be redirected towards ethanol production. When asked about additional measures to enhance the viability of mills beyond increasing ethanol diversion, he suggested that diversification into other products is essential.
He also recommended that the government adjust ethanol prices in accordance with the rising FRP of sugar. "Without revising ethanol prices, the industry risks becoming unviable," he cautioned. "We also need to explore diversification into various other products."
He pointed out that ISMA is currently conducting a pilot project on green hydrogen derived from bagasse. Additionally, they are engaged in initiatives related to sustainable aviation fuel and compressed biogas.
The central government has set a requirement for 1 percent sustainable fuel in the aviation industry by 2027.
"We are focusing on 3 to 4 key areas and anticipate favorable policies from the government, which will enable us to expand into other products and enhance the viability of the industry," he added.
