Sugar is among the most politically sensitive commodities in India. It is heavily regulated. In a bid to curb price fluctuations the government frequently imposes bans on exports and sets mill-wise quota. India first joined the sugar export market in 1957 on the initiative of Indian Sugar Mills Association (ISMA). Since then ISMA, which was set up in 1932, has been at the forefront of spearheading exports. Last year the association added bio-energy in its name, rebranding itself as Indian Sugar and Bio-energy Manufacturers Association but continuing to use short form ISMA. In a freewheeling chat with DH’s Gyanendra Keshri, ISMA Director General Deepak Ballani talked about the industry’s production trends and the need for allowing the export of surplus sugar in order to avoid market imbalances. Edited excerpts:
What are your projections on sugar production?
Our initial projection for the current season (October 2023 to September 2024) was 337 lakh tonnes. This was revised downwards in our second, third and fourth projections. The government’s projections were also revised downward because of the deficient rain during the 2023 monsoon season in Karnataka and Maharashtra. The government decided to reduce the diversion of sugar into ethanol. As a result we are estimated to close the year at 340 lakh tonnes, which is nearly the same as our initial forecast. In the current sugar marketing season which closes on September 30, we are expected to have a surplus of 85 lakh tonnes. For the next season our projection is 333 lakh tonnes.
How are Karnataka and Maharashtra after suffering deficient rains last year?
Maharashtra and Karnataka are among the top producers. Any impact in these states affects the overall production. In 2023, both these states faced problems due to deficient monsoon. This year, the monsoon has been very good in both these states. As on September 13, the rainfall in these two states was around 25 per cent above normal. Reservoir levels in these states are almost full. This will ensure sufficient water availability. For the produce that we will get in 2024-25 season sowing was done last year, so this monsoon’s rain will not impact the acreage. However, per hectare yield is expected to be higher. This year’s good monsoon will have a positive impact on acreage for the 2025-26 season. For the 2024-25 season which begins October yield is expected to be higher that will offset reduction in cane area to some extent.
Despite the comfortable stock, the government has sustained a ban on sugar exports for over two years now. How do you see this?
We have requested the government to allow at least 20 lakh tonnes of sugar export. Even after this export we will be in a very comfortable position. As per the guidelines, we should maintain a stock of around 55 lakh tonnes, which gives a safety of around two to two-and-a-half months. Our closing stock this season is projected at 85 lakh tonnes. This means we have a surplus of around 30 lakh tonnes. Maintaining a high surplus poses a financial burden on the sugar mills.
When is a good time to export? How is the price in the international markets?
These days the price in the international markets is good. By November, December it may go down with new supply coming from Thailand. Our request to the government is that the export should be allowed now so that our exporters make good profit.
How will it impact the domestic prices, which seems to be volatile in the recent months?
Sugar price in India is among the most stable if you see the long-term trend, say 10 years. The Rs 40 per kg has kind of become a psychological barrier. Sugar is highly regulated. The government releases a monthly quota to mills. If the prices rise the quota is increased. The government is not allowing it to go above Rs 40 per kg, whereas the cost of production is rising. The Fair and Remunerative Price (FRP) of sugarcane is increased almost every year. This means the price paid by mills to farmers is increasing, but the selling price remains the same. Sugar MSP has not been increased since 2019. We have to understand who buys sugar. Around 70 per cent of sugar goes to bulk consumers like Coke, Pepsi, Nestle, Bikanervala and other manufacturers of juice, soft drinks, chocolates etc. So the price regulation is helping these bulk consumers more than the common people.