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SUGAR

Food & public distribution dept meets ISMA to discuss sugar price fall
Wednesday, 10 January, 2018, 08 : 00 AM [IST]
Our Bureau, New Delhi
A meeting was held by the Department of Food and Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution, government of India, with the Indian Sugar Mills Association (ISMA) and the National Federation of Cooperative Sugar Factories Ltd (NFCSF) recently to discuss the falling prices of sugar in the country. Although they have fallen by over 10 per cent since October 2017, it was not reflective of the fundamentals.

Even though the sugar production between October and December 2017 was higher than the corresponding period the previous year.

The sugar stocks on December 31, 2017 (about 85 lakh ton) were substantially lower than those on December 31, 2016 (about 99 lakh ton). Therefore, the closing balance on September 30, 2018 will be one of the lowest ever and as tight as last season’s closing balance (about 40 lakh ton).

It was agreed that there was unrealistic talk about 2018-19 production, whereas not even about 10 to 15 per cent of the sugarcane for harvesting then has been planted.

Even though with better rainfall in the western and southern states, the sugarcane sowing may improve, it was accepted that it is totally premature to even guess a figure about next season’s production.

In fact, the sugar production can get adversely affected if the rainfall between June and September 2018 is not good. Therefore, July 2018 will be a better time to have any preliminary idea about the 2018-19 production, and not earlier.

Nevertheless, the food ministry officials assured that if there is a surplus in the next season (2018-19), appropriate and timely action would surely be taken with regard to policies to ensure that the surplus, if any, is disposed off in time and in the best manner as deemed appropriate.

It was pointed out that in the last three years, the government has taken various steps, including giving concessional loans, encouraging exports, incentivising ethanol production to reduce surplus sugar, etc. And, therefore, everyone felt that as and when required, it will certainly take appropriate and timely decisions.

Since the sugar production and demand in the current season are very balanced, and the closing balance will still remain tight at just about 40 lakh ton at the end of the season, there is no scope of any exports in this season.  Therefore, reduction in the export duty may not make much sense now.

About the subsidies being given by the government of Pakistan, it was noted that in the  current scenario, it was not viable to import from Pakistan.

One could get a sense that if Pakistan imports do become viable, or if any contracts start taking place for importing sugar into India from Pakistan, especially if the state of Sindh notifies any subsidy, the government of India is willing to increase the import duty adequately to check any such imports.

It was highlighted that as per the Indian Customs Tariff Act, the sugar import duty could be raised to 100 per cent within a couple of days.

The government would consider increasing the import duty to check all unnecessary imports, and give full comfort to the market that no imports will happen.

Regarding the need to export the surplus, if any, in sugar season (SS) 2018-19, the governments of Bangladesh and Sri Lanka are being approached to extend preferential duties under the South Asian Free Trade Area (SAFTA) and the treaty amongst the South Asian Association for Regional Cooperation (SAARC) nations.

These two neighbouring countries together import around 30 lakh ton annually, which will be sufficient to absorb all the surplus, if any, next year.

It was agreed that there is enough time for such government-to-government discussions and negotiations, since the surplus, if any, would come up only after November 2018, and there is no concern about the surplus till then.

The commerce minister, who was also approached, has assured that he will use his good offices to extend all the support and assistance that is required in this direction.
 
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