Allaying fears of a spike in sugar prices, the government on Thursday said that there are “ample and sufficient stocks” of the sweetener to meet the domestic demand in the next season (2023-24) beginning October, but hinted at ban on exports during the period.
“The crushing of sugarcane will commence from next month.. there will sufficient output to meet domestic demand and supplies for ethanol,” Sanjeev Chopra, secretary, department of food and public distribution, told FE. The food secretary also said that a realistic assessment of production will be conducted shortly and “allocating the export quota for the next season will be decided taking into account production prospects.”
According to Chopra, sugar mills had 8.5 million tonne (MT) of sweetner at the start of the current month, while the monthly demand is around 2.5 MT during October-December festive season.
Trade sources believe that the possibility of decline in production next season (2023-24) could force the government against granting sugar exports quota.
The government is also considering a proposal to impose stock holding limits for wholesalers, prescribing the maximum quantity of sweetener they can keep in order to check any price rise. In 2016, stock limits were imposed for sweetener last.
Sources said that sugar production in the 2023-24 season (Oct-Sept) likely to fall to around 31 million tonne (MT) from 33 MT in the current season which excludes allocation for ethanol, according to initial industry assessment.
As on September 1, overall sugarcane acreage for the current kharif season stood at 5.9 million hectares (MH), marginally higher than 5.5 MH in the previous year.
According to the department of consumer affairs, modal retail prices of sugar were reported at Rs 42/kg on Wednesday, which had been unchanged in the last four months. Six months back, modal retail sugar prices were Rs 40/kg.
Retail inflation for sugar rose by 3.57% in July, 2023 on year while a year ago the price rise was 5.22%. Sugar has a combined weightage of 1.13% in the consumer price index (CPI).
In the current season, the government has decided not to approve a second tranche of sugar exports beyond 6 MT. This follows inputs received by the food ministry on the crop prospects from the various key sugarcane producing regions.
Indonesia, Bangladesh, United Arab Emirates and Djibouti have a major share in the total sugar exports.
In 2021-22 season, India exported a record 11.2 MT of sugar.
Crisil in its report in July had stated that higher domestic sugar prices and increasing sales of ethanol will help offset the rise in sugarcane cost and lower exports in fiscal 2024, leading to stable operating profitability for integrated sugar mills, or those with sugar, distillery and power cogeneration facilities.