Sugar mills body wants immediate nod for 1 million tonne export

The National Federation of Co-operative Sugar Factories Ltd (NFCSF) has demanded that the Government allow exports of one million tonne sugar immediately. In addition it also wants that exports of one million tonnes a month be allowed till March 2012.

Such a move would help the sugar factories take advantage of global prices that are seen to be softening and make timely payment to farmers in the new crushing season which started last month, Mr Vinay Kumar, Managing Director, NFCSF told reporters on Wednesday.

Sugarcane crushing for the current year has started with several mills in Western Uttar Pradesh, Gujarat and Maharashtra starting their operations in the past couple of weeks, Mr Kumar said. Improved cash flow during the crushing season between November and March could help sugar millers avert cane arrears.
international prices

The international sugar prices have started declining, Mr Kumar said. Prices of refined sugar in London have softened a bit in the past week to $690 a tonne from $706. “We will miss the bus if the Government does not allow exports immediately,” Mr Kumar said.

The Federation estimates that India would be left with a surplus of four million tonnes by the end of current sugar year in September 2012. Sugar production is estimated in the range of 25-26 million tonnes in the current year, up from 24.3 million tonnes in the previous year. Consumption for the year is estimated to be around 22 million tonnes. The opening stocks were about 5.8 million tonnes at the beginning of the current year, according to industry estimates.

“Allowing exports of one million tonne a month would not hamper both domestic and global prices,” Mr Vinay Kumar said adding that exporters get a premium of Rs 5 a kg in the international market. Retail prices of sugar are currently ruling at Rs 32-33 a kg in the domestic market.

For sugar year 2011-12, the Government is yet to announce the quantum for exports. In 2010-11, the Government had allowed exports of 2.6 million tonnes that included 1.5 million tonnes in three equal tranches under the Open General Licence (OGL). The remaining 1.1 million tonnes was pending export obligation on part of the mills under the Advance License Scheme.

Further, Mr Kumar demanded that the Government announce pricing for ethanol, which is used for blending with petrol. The National Policy on Bio-fuels has targeted for a 20 per cent ethanol blending by 2017. At present, petrol is blended with five per cent ethanol.

The sugar industry supplies ethanol at Rs 27 a litre and is demanding a price of at least Rs 35-36 a litre. In the current year, the demand for ethanol by oil marketing companies stands at 101.66 crore litres whereas the industry has offered to supply 60.49 crore litres. “A pricing policy of ethanol would ensure that more ethanol makers to come forward for supply of more quantities,” Mr Kumar said.

source: thehindubusinessline