Blame it on price fall, sugar millers, exporters won’t honour deal

With the crash in international prices of raw sugar, both the sugar millers as well as the exporters are not willing to execute the commitments they have already entered into. Interestingly, even as the Union government announced a subsidy package to boost raw sugar exports, it is also being imported in the country, making a mockery of the government policy.

As the raw sugar prices had crashed to Rs 25/kg in the domestic market, the Union government announced a package of incentives on the eve of general elections to enable the mills make cane payment to farmers. It included subsidy of Rs 3,300/tonne for raw sugar exports and interest-free loan against the excise duty paid by the sugar mills.

However, very few sugar export deals have been signed after the announcement of export subsidy as international raw sugar prices decreased while the domestic sugar prices have increased by more than 25% during last one-and-ahalf months.

In fact, the sugar industry leaders say that the raw sugar export subsidy had not helped as most of the raw sugar was shipped out of the country before the announcement of the subsidy scheme.

The office of the sugar commissioner of Maharashtra has received some complaints from the sugar mills about exporters not taking delivery of raw sugar despite signing agreements.

“We have received a few complaints from the sugar mills against some exporters for not abiding by their commitment to lift raw sugar,” said a government official on condition of anonymity.

However, industry sources say that there are cases of even the sugar mills trying to avoid selling raw sugar, as it is giving lower returns than the domestic market. Wholesale sugar prices in the domestic market are in the range of Rs 31.50/kg to Rs 32.50/kg. The prices are so lucrative that some exporters, who had taken order for delivery of sugar and taken it to the port for exports, have sold the sugar in the domestic market, claimed trade sources.

To make a mockery of the entire raw sugar export policy, sources said that 50,000 tonne raw sugar has been imported this month at the Kandla port. “It is profitable to process the cheap imported raw sugar and sell at the prevailing high rates in markets like Ahmedabad and Mumbai,” said the source.