Overview of ISMA’s Request
The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) has called on the government to reconsider its strategy for managing surplus sugar. ISMA has highlighted a projected surplus of 3.6 million tonnes (mt) and suggests that permitting exports could improve the financial health of sugar mills and ensure timely payments to cane farmers. According to ISMA, allowing exports would enhance the liquidity of sugar mills. Further contributing to the industry’s smooth operation and fostering economic stability.
Production and Consumption Estimates
The request comes after the Food Minister’s statement that decisions on sugar exports will depend on the following year’s production assessment. Sugarcane sowing is ongoing, with the first production estimates expected in late September. The overall sugar production estimate for the 2024-25 season to be available in October. ISMA predicts a significant surplus for the current season. With an opening stock of about 5.6 mt on October 1, 2023, and an estimated production of around 32.1 mt, the projected opening stock for the upcoming season on October 1, 2024, could be about 9.1 mt. Domestic consumption is estimated at 28.5 mt, leading to a considerable surplus.
Financial Implications for Millers
The surplus sugar could lead to additional costs for sugar mills due to idle inventory and carrying costs. ISMA has emphasized that the domestic availability of sugar is more than sufficient. Furthermore, the ethanol blended with the petrol (EBP) program can be managed within the current sugarcane production. The surplus resulting from the temporary halt in ethanol production from sugarcane and sugar syrup cannot be reverted to ethanol production, adding to the excess. The government has increased the fair and remunerative price (FRP) of sugarcane for the 2024-25 season. This rise will increase the cost of cane and sugar production, imposing an additional burden on financially stressed mills. Mills are mandated to pay the cane price within 14 days of supply, adding to the financial pressure.
ISMA’s Position and Government Collaboration
The Director General of ISMA emphasized the industry’s alignment with the government’s goals of improving the welfare of sugarcane farmers and ensuring the sustainable growth of the sugar industry. ISMA is actively working with the government to find viable solutions for utilizing the surplus generated this season. Allowing exports would stabilize domestic stock levels, sustain the EBP program, and improve the financial liquidity of sugar mills.
ISMA’s appeal to the government accentuates the need for a reevaluation of the sugar utilization plan. The projected surplus of 3.6 mt presents both a challenge and an opportunity for the sugar industry. Allowing exports could mitigate financial stress on mills, ensure timely payments to farmers, and support the continued success of the EBP program. Exporters should closely monitor these developments to capitalize on potential market opportunities.