Sugar mills in the South are seeking relief from export commitments directed by the Centre with those in Tamil Nadu wanting exemption while those in Karnataka feel they have been given a disproportionately high quota.

The Centre has targeted 20 lakh tonnes of sugar exports in the current season (October – September) in the backdrop of a huge surplus. This is about 6.5 per cent of average production based on the output of last two years and that of the current season up to February.

Target too high

The South Indian Sugar Mills Association – Tamil Nadu, has sought total exemption from export commitment and be allowed to avail of the sugarcane price support of Rs 55 a tonne announced by the Centre.

It has pointed out that production in the current season is about 6 lakh tonnes against 13.61 lakh tonnes and 10.65 lakh tonnes in the last two seasons. So the export quota of 84,000 tonnes is inordinately high. , about 14 per cent of production. This is twice as much proportionately when compared with other major sugar producers for whom sugar output has increased.

For instance, UP’s production is about 120 lakh tonnes and the export quota 6.7 lakh tonnes; in Maharashtra it is 108 lakh tonnes but export commitment is 6.21 lakh tonnes. Also, sugar production in Tamil Nadu is less than half its local consumption. Any exports under such a deficit situation will mean more sugar will have to be trucked in from elsewhere to meet local demand

Region specific export

On earlier occasions, when there had been a regional deficit, the Centre had allowed limited imports to the specific areas. Similarly, when the surplus is primarily restricted to the North and West, exports should also be from there, argue sugar mill representatives.

According to industry sources, mills in neighbouring Karnataka also feel the export quota is high for them. The commitment is about 2.8 lakh tonnes, about 8 per cent of its estimated sugar production of 35 lakh tonnes. The industry believes it has been burdened with an excess of about 50,000 tonnes in export quota and this will have to be corrected.

Sugar production is well over 300 lakh tonnes which will generate a surplus of about 45 lakh tonnes. Production in the coming season is also expected to match this high volume.

Exports unviable

This has resulted in sugar prices ruling around ₹26,000 a tonne in the domestic market which is well below cost of production of about ₹35,000. Cash strapped mills have not been able to pay farmers for sugarcane and arrears are around ₹19,000 crore.

But with prices even lower in international markets because of a global surplus sugar mills will lose more on exports.

However, to support the farmers the Centre has come out with the production subsidy but on the condition that mills conform to its directives during the season.

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