Despite contraction, sugar mills are well on track
Sugar mills in India have contracted to export 4.9 million tonnes of sugar during the ongoing 2020-21 sugar season, which started on October 2020. In other words, the mills have already contracted over 80 per cent of the government allocated sugar quota of 6 million tonnes. Importantly, out of this contracted exports, the mills have despatched 3.39 million tonnes (over 68 per cent) during the current season, while 2.5 million tonnes have already been exported out of various ports. Out of the total despatched sugar, raw sugar amounts to about 1.9 million tonnes, while the remainder is white/refined sugar, according to All India Sugar Trade Association (AISTA).
Experts are of the view that this is a big achievement on the export front, at a time when there was a delay in the announcement of the export policy and the container shortages. At least 700,000 tonnes have been physically exported every month for the last three months.
According to AISTA, this year, Indonesia has emerged as the top importer of Indian sugar, replacing Iran, which has traditionally been a major buyer of the product. At 961,000 tonnes, Indonesian import covers 38.5 per cent of the actual exports taken place so far. This is followed by Afghanistan (about 12 per cent), Sri Lanka (10 per cent), the UAE (9 per cent) and Somalia (7.6 per cent).
AISTA has cited the currency issue that has hampered Iran’s imports this time around. Last year, Iran was the top export destination for Indian sugar, with 1.1 million tonnes. However, this year, as Indonesia brought down its quality requirement to 600 icumsa from 1,200 icumsa, India managed to match it and emerged as the top importer – so much so that Indonesia has now become the new market for Indian sugar.
Indonesia joins the party
“Despite the delay in the announcement of the export policy and the container shortages, we are well on course to avail the 6 million tonnes of quota allocated by the government,” says Rahil Shaikh, vice-chairman, AISTA & managing director, MEIR Commodities India Pvt Ltd, Mumbai. “With Indonesia bringing down their quality standard, we have been able to match their requirement for the first time, which explains this major surge in export to that country. On the other hand, Iran, despite being our traditional market, has suffered due to their currency issue”. MEIR Commodities, an agro commodity trading firm, focusses on domestic and international markets in various commodities like sugar, ethanol, molasses, edible oil, organics, etc.
The Delhi-based trade association, which completed five years in January 2021, has revised upwards its domestic sugar production estimates to 35 million tonnes for the 2020-21 marketing year, from the earlier projections of 29.9 million tonnes. Consumption has been pegged at 25.5 million tonnes.
Meanwhile, Indian Sugar Mills Association (ISMA), in a release, has said that, as on 31 March 2021, sugar mills in India have produced 27.76 million tonnes of sugar as against 23.32 million tonnes produced last year. According to ISMA, sugar production in Maharashtra was 10.05 million tonnes till 31 March 2021, as against 5.9 million tonnes produced last year during the same period. Mills have so far crushed about 96.1 million tonnes of sugarcane, which is the highest ever in the history of the state, surpassing 95.4 million tonnes of cane crushed in the full 2017-18 season.
The reason for lower production, despite higher crushing, as compared to 2017-18, is the lower sugar recovery and the diversion of sugarcane juice /B heavy molasses for ethanol production in the current season. So far, 113 mills in the state have already closed their crushing operations in the state, while 76 sugar mills are operating. On the corresponding date last season, out of 146 mills, 28 were in operation.
In UP, 120 sugar mills, which were in operation, have produced 9.4 million tonnes of sugar till 31 March 2021. Out of 120 sugar mills in existence, 39 have stopped crushing operations. As compared to this, 113 were in operation last year on the same date, with the sugar production touching 9.72 million tonnes.
In case of Karnataka, 66 sugar mills have produced 4.14 million tonnes of sugar. Out of these sugar mills, 65 mills have already closed their operations in the state and only one mill is in action. During the corresponding period last year, 63 sugar mills had produced 3.35 million tonnes of sugar; 60 had ended their operations, while three mills stayed in operation. However, in the upcoming special season in July-September 2021, a few mills in South Karnataka will operate and a total of about 4.25 million tonnes of sugar is expected to be produced in the state in the current season, says the ISMA release.