The Indian Sugar and Bio-Energy Manufacturers Association (ISMA), the apex body in the sugar and bio-energy industry in the country, predicts a significant sugar surplus of upto 36 lac tons for the current season. According to the experts, the opening stock of approximately 56 lac tons in October 2023 and forecasted domestic consumption of nearly 285 lac tons for the season, will result in a significantly higher closing stock of 91 lac tons by the end of September 2024. This estimated surplus, amounting to 36 lac tons above the normative stock of 55 lac tons, can potentially lead to additional costs for the millers due to idle inventory and carrying costs.
"In light of these projections, it is clear that the domestic consumption and availability situation is more than comfortable; the EBP can be very well managed within the sugarcane production and that the surplus sugar left after that because of the sudden pause of ethanol blending from sugarcane and sugar syrup is in excess and cannot be converted back to Ethanol," ISMA said in a statement.
In this situation, ISMA has urged the Government to re-consider permitting the export of surplus sugar after due consideration of domestic demand and supply. This will boost the financial liquidity of sugar mills and enable timely payments to cane farmers. ISMA believes that allowing exports will contribute to the smooth functioning of the sugar industry and foster economic stability.
Utilising the surplus
ISMA urges the government to consider the request for surplus sugar exports as it will be a win-win for all stakeholders, including farmers. Commenting on this, Deepak Ballani, Director General of ISMA said, "We at ISMA share the government’s policy objectives for ensuring the betterment of sugarcane farmers and the sustained growth of the sugar industry in India ensuring stability in the sugar sector. We are constantly working with the government to find ways for the economic well-being of the farming community and implement workable solutions to utilise the surplus generated this season. Allowing exports would not only ensure a comfortable stock for domestic consumption and sustain the Ethanol Blending Program (EBP) but also contribute to maintaining the financial liquidity of sugar mills, enabling timely payments to farmers”.
Impact of FRP
The government has increased the FRP of sugarcane for the 2024-25 season by Rs. 25 per qtl to Rs. 340 per qtl. This increase in FRP will directly increase cane cost and thereby cost of production of sugar. Earlier in March, the National Federation of Cooperative Sugar Factories Ltd (NFCSF) had urged the government to allow the diversion of surplus sugar towards ethanol production. They highlighted that sugar mills are facing a financial crisis due to sudden restrictions imposed by the Centre on ethanol production.