Potential government ban on sugar exports might be imposed
Published on: October 14, 2023.
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Changes Ahead For Indian Sugar Exports
Indian officials have expressed concerns over sugar exports in light of the weakest monsoon season in five years, potentially impacting sugarcane crops in Maharashtra and Karnataka, major producing states. They are contemplating shifting sugar exports from the ‘restricted’ category to the ‘prohibited’ category for the entire 2023-24 season (October-September).
At present, sugar mills can apply for an export quota under the ‘restricted’ category. However, if these exports move to the ‘prohibited’ category, it will lead to a complete export ban.
Fall in Sugar Production Expected
As one official noted, “Sugar output is projected to decline to 30 million metric tonnes (mt) in the 2023-24 sugar season, pitted against domestic consumption of 27.5-28 mt as El Nino compromises monsoon rain in August”. The forecast for El Niño, which is expected to strengthen through 2023-24, could lead to drier conditions, resulting in an even further decline in sugar production for the 2024-25 season.
In August, the El Nino weather pattern brought about the driest month in over a hundred years. The recorded rainfall was 161.7 mm, a record low since 1901.
India’s Position in Sugar Production and Export
In the 2021-22 season, India usurped Brazil to emerge as the world’s largest sugar producer and second-largest exporter. However, export controls were imposed in October last year, with a mill-wise quota system in place. By the end of the 2022-23 crop year, local sugar mills had exported 6.2 mt of sugar.
Previously, on 2 November, Mint reported that the food and public distribution department might limit sugar mills’ freedom in exporting sugar to uphold domestic supply and regulate prices. As we near key elections in India, the government has ramped up export controls to maintain local prices. These controls are not just confined to sugar but also extend to staple food grains, including wheat and rice.
A Fine Balance: Production, Export and Consumption
Estimates indicate that for the 2022-23 season, India produced 32.7-32.8 mt of sugar. This was after diverting about 4.3 mt of the commodity to produce ethanol, ending the season with stockpiles ranging between 5.5-6 mt. Increasing the production of ethanol at the expense of sugar could result in lower closing stocks. A slightly higher closing stock, the official suggested, could help keep domestic sugar prices in check and provide a buffer for the 2024-25 season.
Another official stated, “The government doesn’t want to gamble. The priority is to ensure ample supply for domestic consumption, keep domestic sugar prices stable, promote ethanol production, and ensure adequate closing stock at the end of the season.”
Yet, inquiries sent to spokespeople for commerce, agriculture, consumer affairs, and food and public distribution ministries have gone unanswered.
Source: livemint.com
