Apex co-op body to export raw sugar to cut inventory

PUNE: The Maharashtra Rajya Sahakari Sakhar Sangh, the apex body governing the 187 co-operative sugar mills in the state, is ready to flex its muscle. It has decided to export not just processed white sugar, but also raw sugar and molasses, on behalf of its members.

“We hold an import-export licence and we will open letters of credit (LCs) on behalf of our members with international buyers,” Prakash Naiknavare, MD, Maharashtra Rajya Sahakari Sakhar Sangh, said. At a meeting held in Mumbai on Friday, the Sakhar Sangh has decided that it will export raw sugar to refineries, molasses and white sugar.

Mr Naiknavare said that at any given time, there is a global tradeable surplus of 500 lakh tonnes of sugar. Of this, 67% is raw sugar, while the balance is white.

“Indian white plantation sugar is 100-150 ICUMSA, so we already face a big limitation in the global white sugar market. Hence, the Sakhar Sangh has decided that it will export raw sugar to refineries, like those in Dubai, where Brazilian and Thai sugar is refined according to market needs,” Mr Naiknavare said.

Molasses is in demand as an input for cattle feed, and is in short supply, globally. Corn and sugarcane are the two sources for molasses and the grain is already under pressure due to demand for ethanol in the US market. Domestic prices of molasses range from Rs 200-800 per tonne and the Sakhar Sangh is confident that international prices are higher.

At present, traders get the benefit of the margins which the Sangh will be able to get for its members, Mr Naiknavare said. “We want to bring down the production of white sugar; this is one way of doing it,” Mr Naiknavare said. During the current crushing season (Sept-Oct), sugar production across the country was about 280 lakh tonnes, while consumption is expected to be 190 lakh tonne and exports could touch 20 lakh tonne.

This will mean that the crushing season beginning October 2007, will start with a carryforward stock of 103 lakh tonnes of sugar. The 2006-07 season began with a carryover stock of 40 lakh tonnes. “Carrying over stocks has a cost besides blocking funds and the commodity deteriorating. We need to plan for the future, taking a long term view,” Mr Naiknavare said.