Industry liquidity affected by ban on sugar exports

06-Jun-2024 06:11 PM

Mumbai. Despite indications of improvement in sugar production in India and domestic market prices remaining stable within a certain limit, the indefinite ban on its export is affecting the liquidity (money flow) of millers. Although ISMA is repeatedly urging the government to allow export of 20 lakh tonnes of sugar, there is very little possibility of it being accepted in the near future.

Now the price of sugar in the international market has also come down to the lowest level in the last 18 months, due to which it is difficult to get more margin on exports.

Due to the export ban, sugar mills are facing difficulty in operating and paying the dues of sugarcane farmers. According to industry analysts, in the marketing season of 2023-24, with a production of 320 lakh tonnes and outstanding stock of 57 lakh tonnes, the total availability of sugar reached 377 lakh tonnes,

while its domestic demand consumption is likely to be 285 lakh tonnes. If a reserve stock of 60 lakh tonnes of sugar is kept aside for the next season,

there will still be a surplus stock of about 30-32 lakh tonnes which can be allowed to be exported. If export of 20 lakh tonnes is allowed out of this, there will be no impact on the supply and price of sugar in the domestic sector, while the millers will be able to get some additional income.

But the government thinks differently. It feels that sugar production may decrease in the coming season. Although it has increased the production target of sugarcane to 47 crore tonnes,

which is more than the estimated production of 44 crores for the 2023-24 season, but sugar production is likely to be affected if the crop is damaged due to drought and insect-disease infestation. Apart from this, opening of exports can also have a psychological effect on the sugar market.