Tuesday, June 16, 2009

India will have to import raw sugar next year

Indian Sugar Mills Association (ISMA) said that India would not face sugar shortage next year due to high stock and increasing cultivation of sugarcane by farmers who are motivated by the high price of sugar. Samir Somaiya, president, Indian Sugar Mills Association (ISMA) said that higher prices had helped Indian farmers and if they had a good monsoon, sugarcane planting would be higher. Still, India will import about 3 million tonnes of raw sugar.

According to government estimates, which are more reliable, at the beginning of the current season, the sugar stock was 10 million tonnes. Still according to Smaiya, some degree of import will be needed in FY2009-2010.

India is the to sugar consuming country in the world. In March, ISMA predicted a slump of 75% slump in sugar stocks. In institute doubled its sugar stock prediction to 4 million tonnes on October 1, 2009. In a separate statement, Somaiya said that sugar mill owners had planned to import 1.3 million tonnes of raw sugar and already 900,000 tonnes of sugar had arrived.

Meanwhile, Indian government gave green signal to or state run trading firms to import 1 million tonnes of white sugar at zero duty within August this year which will be sold to the open market.

In Fy 2007-08, the production was 26.5 million tonnes and exported 5 million tonnes. India FY 2008-09, India’s domestic sugar production fell to 14.8 million which was still slightly higher than earlier prediction of 14.5 million tonnes. Due to this sharp fall in production, Indian had to import sugar.

Currently, the Indian government is busy with its month long general election and eased imports of raw and refined sugar, imposed stock limits for traders and considered to ban “sugar futures.” On April 28, 2009, the federal government issued a statement where it revealed its plans to change a rule that would require sugar mill owners to sell 10% of their processed sugar at low rates in the domestic market. Indian sugar mill owners import raw sugar from abroad and then process them and export them. Mr. Somaiya said that government is changing its policies rapidly and it would take some time for them to adjust to the changes. Siddharth Sriram, chairman, Mawana Sugars Ltd. said that he was very happy with government’s decision to levy “zero duty” on raw sugar imports because it eats away profitability.

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(This entry was originally published in April 2009 and it based on the context on that time.)

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