No sugar export under OGL in medium term

The government may not consider export of sugar under open general licence (OGL) in the medium term.

Sources in the food ministry said there was no decision to forward any such proposal to the group of ministers (GoM), as was proposed earlier. “The main agenda of the ministry now is food security. Sugar exports can be revisited later or when full sugar production estimate is available,” said a source.

The GoM had put sugar exports on hold in the first week of January. A review was proposed later. To this effect, a proposal was mooted by food and consumer affairs ministry, to be forwarded to Empowered Group of Ministers (EGoM), so that exports could start by February 2011 to take advantage of high global prices. However, the proposal was dropped, said official sources.

“With wide gap between demand and supply in the domestic market, first enough food, especially essential commodities, has to be secured. This goes for all commodities covered by the public distribution system. Exports of all such commodities are under review,” said an official source.

Officials also said that while food security remained the priority, any delay might be a major opportunity loss. “With global demand rising, February to May would have been the ideal period for exports, before sugar from Brazil arrives in the market. The whole point was to fetch a better price for farmers and reduce the subsidy burden on the government,” said officials.

Industry sources are optimistic that the global market will continue to see huge demand for sugar following floods in major sugar-producing markets like Australia and Brazil.

In fact, sugar could fetch better price if exported later because by then estimates would have arrived from all other markets facing production problems, said an official. Domestic sugar production is estimated at 24.5-25 million tonnes in the current year, around 30 per cent higher than in the previous year.

The government has allowed mills to sell more in the open market. It has made available 1.7 million tonnes non-levy sugar for January, 1.5 million tonnes higher than the December figure.

India is normally a net sugar exporter, but had to import in the previous two seasons due to lower output, prompting the government to ban unrestricted exports in February 2009.

source: BS