Sugar lobby wants shipments to Iran to expand export basket

Lucknow

The domestic sugar traders have demanded the resumption of shipments to Iran to widen the export market for Indian sugar and create a premium for it.

According to the All India Sugar Trade Association (AISTA), India managed to export nearly 6 million tonnes (MT) in the current season without any export to Iran, which is estimated to have the potential to buy 1.2 MT of the commodity.

“With the changed political scenario in the global markets, it shall be prudent to find some mechanism to export sugar to Iran,” AISTA chairman Praful Vithalani said in a press communiqué on Aug 12.

Besides, he stressed the urgent need for a timely announcement of sugar export policy for the next season. “Many exports subsidy claims of previous years have not yet been settled. These claims (should) be settled and paid expeditiously as mills shall require funds before (the) start of the season.”

According to AISTA, the “substantial” increase in ocean freight and the non-availability of containers have eroded the margins of export houses and are proving to be a bottleneck in exports.

Of the 6 MT of export contracts under the maximum admissible export quota (MAEQ) 2020-21 scheme from Jan 1 to Aug 5, 2021, more than 5 MT has already been shipped.

Indonesia accounts for the largest share of Indian sugar exports in the current season with 33 per cent or nearly 1.7 MT of shipments, followed by Afghanistan and UAE with 12 per cent and 9 per cent of the pie respectively. Other major destinations include Sri Lanka, Somalia, Saudi Arabia, Bangladesh, Djibouti, Iraq, Malaysia, Sudan, Yemen, Tanzania and China.

The value of sugar already exported or under process is in excess of US$2.5 billion or about Rs 18,600 crore, contributing to exports earnings, particularly in a pandemic year, and increasing the liquidity with the sugar mills to pay the cane farmers.

“The international market has gone up from 17.28 cents/pound on July 10, 2021 to 19.59 cents/pound as of August 11, 2021, a rise of about 13.4%. The rise in world sugar prices is on account of weather problems in Brazil,” AISTA added.

Last month, the Indian Sugar Mills Association (ISMA) had estimated the opening sugar balance for the next sugar season (Oct-Sep) 2021-22 at 8.7 MT. The calculation was based on the opening balance of about 10.7 MT as of Oct 1, 2020, estimated sugar production for the current season 2020-21 of 30.9 MT, expected domestic sales of 26 MT and exports of 7 MT during the season.

(Virendra Singh Rawat is a Lucknow-based financial and economic journalist.)