ISMA asks Govt to re-evaluate utilisation plan, predicts large surplus of sugar

Indian Sugar and Bio-Energy Manufacturers Association (ISMA) has urged the Centre to reconsider permitting the export of surplus sugar, estimated at 3.6 million tonnes (mt), after due consideration of domestic demand and supply as such a step will enhance liquidity of sugar mills.

“This will boost the financial liquidity of sugar mills and enable timely payments to cane farmers,” ISMA said in a statement Wednesday. ISMA believes that allowing exports will contribute to the smooth functioning of the sugar industry and foster economic stability.

The latest representation of the industry body has come close after the Food Minister’s assertion that any decision on sugar export will be taken based on the assessment of next year’s production. As sugarcane sowing is continuing and the first estimate of production of sugarcane will only be released in the last week of September, the sugar production estimate for 2024-25 season (October-September) can be expected only in October, experts said.

Additional costs on millers

ISMA, the association of private sugar mills, predicts a significant sugar surplus of up to 3.6 mt for the current season. It said that with the opening stock of about 5.6 mt of sugar as on October 1, 2023 and estimated production of about 32.1 mt, the opening stock as on October 1 this year may be about 9.1 mt after factoring the surplus.

Highlighting that the domestic consumption of sugar in the current season is about 28.5 mt, ISMA said it will result in a significantly higher surplus. This estimated surplus can potentially lead to additional costs for the millers on account of idle inventory and carrying costs, it said.

“In light of these projections, it is clear that the domestic availability situation is more than comfortable,” ISMA said, adding that even the ethanol blended with petrol (EBP) programme can be very well managed within the sugarcane production.

The surplus sugar left thereafter because of the sudden pause of ethanol blending from sugarcane and sugar syrup, is in excess and cannot be converted back to ethanol, it said.

Ensuring stability

ISMA also said since the government has increased the fair and remunerative price (FRP) of sugarcane for the 2024-25 season by Rs 25 per quintal to Rs 340/quintal, it will directly increase cane cost and thereby the cost of production of sugar. “This increase in FRP will also act as an additional burden to the already financially stressed mills as mills are mandated to pay the cane price payment within 14 days of supply of cane.

“We urge the government to consider our request for exports as it will be win–win for all stakeholders, including farmers,” ISMA said.

According to Deepak Ballani, Director General of ISMA, the industry body shares the government’s policy objectives for ensuring the betterment of sugarcane farmers and the sustained growth of the sugar industry in India, ensuring stability in the sector.

“We are constantly working with the government to find ways for economic well being of the farming community and implement workable solutions to utilise the surplus generated this season. Allowing exports would not only ensure a comfortable stock for domestic consumption and sustain the EBP programme, but will also contribute to maintaining the financial liquidity of sugar mills,” said Ballani.

Equal share in ethanol

Speaking on the sidelines of a global conference on June 25, Union Food Minister Pralhad Joshi said the government would decide  on export based on the sugar production assessment, which is dependent on sugarcane output.

In the total supply of ethanol of 327 crore litres until June 15, the share of both grain-based and sugarcane-based distilleries is almost equal. Out of 1,500 crore litres of annual ethanol capacity created by distilleries, the sugarcane-based plants have a maximum of 900 crore litres while the remaining 600 crore litres are created in grain-based plants.

However, as the government had capped 1.7 mt of sucrose diversion for ethanol in the current season, which was later eased with some more quantity allowed that had already been produced before the decision came, the sugar industry could not realise its ethanol production potential and has been insisting on allowing sugar export so that mills can produce more ethanol from B-Heavy Molasses and less quantity from sugarcane juice.