Indian sugar producers need to export the surplus to the international markets to lower their rising inventory, according to Abinash Verma of Indian Sugar Mills Association.
The global markets are said to be facing a deficit of 4 million tonnes and that could improve the price of the sweetener internationally, Verma, director-general at the sugar producers' lobby, told BloombergQuint in an interview. “The high inventory is burdening the industry. So, we need to find ways to push it into the international market.”
Besides, domestic producers are facing other challenges in terms of cash flows and availability of funds, he said.
Domestic Market
The production of sugar this year would be impacted due to the late onset of monsoon in Maharashtra and North Karnataka, Verma said, adding the lower output, however, would not impact the market.
“We will carry about 14.5 million tonnes [of sugar] as of October 2019 into the next season as the opening stock, which is very high,” Verma said. “Even if production falls because of last year's drought and this year in Maharashtra and North Karnataka, we expect that there will be enough sugar in the country. There will be a surplus which we need to export.”
Verma also doesn't expect sugar prices to rise in the domestic market. “The current domestic prices are hovering at Rs 31-32.5 per kilo because of a minimum selling price of sugar fixed by the government. The moment the fixed pricing is removed, the prices will fall,” he said.
The sugar season 2019-20 will start from October and end in September next year.
ISMA Requires Government's Support
- To set a target of about 7 million tonnes of exports next year.
- To provide World Trade Organization-compatible financial assistance to sugar companies.
- To announce export policy for the next season as early as July this year.
Watch the interaction with the management here:
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