Strengthening rupee stymies M’rashtra sugar export plans

Shiv Kumar

Tribune News Service

Mumbai, November 16

In just over a month, Maharashtra’s sugar mills have swung from hope to despair as a strengthening rupee and slower-than-expected rise in international sugar prices have stymied their plans to hit the global markets.

“The rupee has strengthened from Rs 74.40 to around Rs 71 and looks to recover some more, so that could badly affect sugar exports,” says Anand Hade, a commodity analyst in Mumbai. Just one month ago, Maharashtra’s sugar co-operatives under the leadership of Maratha strongman Sharad Pawar had discussed ideas to make inroads into the international sugar markets.

“Sugar prices haven’t gone up as expected,” says an official from the Maharashtra co-operatives department. The state’s sugar mills were expecting output from Brazil, the world’s biggest producer, to crash as that country increased production of ethanol.

The Maharashtra government had set an export target of 50 lakh tonnes of sugar in the current financial year out of which 15 lakh tonnes were to come from Maharashtra alone. Some of the mills have already begun making investments to produce extra-white sugar of international standards for the global markets.

The Central government too came up with a number of subsidies which would have benefitted exporters to the tune of Rs 11 per kg of sugar. Even this could be jeopardised as global producers of sugar like Australia are reported to be planning to move the World Trade Organisation against, what they say, are Indian attempts to dump sugar in the global markets.

According to officials from the Maharashtra sugar federation, India is sitting on at least 44 million tonnes of sugar. Another 35 million tonnes of sugar is expected to be produced by the summer of 2019. On the other hand, domestic demand for sugar is 26 million tonnes annually.