Government mulling sugar export via barter trade with other nations

The Food Ministry is looking at options including the barter trade of the sweetener against import of farm items, as part of steps to offload surplus stock and clear cane arrears

Source: PTI

After the Prime Minister directed to explore possibility of increasing sugar exports, the Food Ministry is looking at various options including the barter trade of the sweetener against import of farm items, as part of steps to offload surplus stock and clear cane arrears. Last week, Prime Minister Narendra Modi called a meeting to discuss the crisis in sugar sector which has resulted in cane arrears of over Rs 14,000 crore to farmers. Modi directed ministries concerned to boost sugar exports and increase ethanol blending with petrol. According to sources, "The Food Ministry is working on various options to open the export line for sugar. It is also looking at allowing sugar export under the barter system with countries from where India imports agricultural commodities." India is a major importer of edible oils from Indonesia and Malaysia, while pulses from Canada, Myanmar and Australia. The Ministry is also examining the feasibility of making it mandatory on part of sugar mills to export certain quantity of sweetener out of total annual production. Apart from exports, the ministry is also considering raising cess on sugar sale from existing 24 paise per kg to shore up falling domestic prices. Overseas sale of sugar at current global prices is not viable in the wake of glut in the world sugar market that has pulled down international prices to over six years low. So, the ministry has been asked to find out other ways for export of surplus sugar of 4 million tonnes. A broad contour of the policy is being formulated but a a final call on this proposal would be taken after another round of meeting, which will be convened soon by the Prime Minister , sources added. Sugar industry -- which owes about Rs 14,398 crore to cane farmers -- is unable to make payment as it is facing severe liquidity crunch on account of surplus production that has resulted in low prices of sugar in the domestic markets. Ex-mill sugar prices have fallen below Rs 20/kg in the country, while the cost of production is over Rs 30/kg. There is still surplus stock of 10 million tonnes in the country. Sugar production of India, the world's second largest producer and biggest consumer, has been more than the country's demand for the past five years. Sugar output is estimated at record 28.3 million tonnes in 2014-15 marketing year (October-September), as against 24.3 million tonnes in the previous year, while the total annual demand is pegged at 24.5 million tonnes.    

August 05, 2015 | 4:50pm IST.

The Dollar Business Bureau - Aug 05, 2015 12:00 IST