The government has approved 2.38 lakh tonnes (lt) of sugar export quota to be exchanged between mills and adjusted with domestic quota, which will help expedite surplus quantity from the country to move out at the earliest and domestic supplies are not disrupted.

The Food Ministry approved 2 lt of quota on Monday and 38,000 tonnes were sold last week, an official said. Many of the mills in Bihar and Uttar Pradesh have entered into contract with mills in Maharashtra, which are at an advantageous position due to their proximity to ports on the West Coast, the official said.

As many as 28 sugar mills have surrendered their export quota, some in part and others in full quantity, which will be offset with domestic quotas of 18 mills, mostly from Maharashtra. As per the guidelines of the government, any mill which wants to surrender the export quota will have to do so before January 4 and the quota will be adjusted with domestic sale quantity allotted every month.

For instance, if a mill in UP surrenders certain quantity of export quota by exchanging it with a mill in Maharashtra, the UP mill will have to sell similar quantity in domestic market and its domestic quota will be accordingly enhanced, but the same quantity will be reduced from the domestic quota of the Maharashtra mill.

Currently, Maharashtra mills are said to be purchasing sugar from Uttar Pradesh by paying a premium of ₹3-3.50/kg as it is viable to export from the West Coast, trade sources said. A mill in Uttar Pradesh was said to have sold its export quota of 20,000 tonnes at ₹39/kg to a mill in Maharashtra, whereas the ex-mill price in UP is around ₹35-36.

The Centre, on November 5, permitted export of six million tonnes (mt) of sugar which could be shipped by May 31. The Food Ministry allowed the shipments by allocating export quota to mills and also made the allotted quantity exchangeable between mills.

According to the notification, all sugar mills allocated a uniform 18.23 per cent of their last three operational years’ average production. The government expects the country’s sugar production to be about 36.5 mt, as estimated by the Indian Sugar Mills Association (ISMA) for current season (October 2022-September 2023). Latest update from ISMA show that sugar production in the first 45 days of the current season was a tad lower at 1.99 mt , against 2.08 mt during the same period a year ago.

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