Indian Government Permitted Exports of Sugar

The food and agriculture Ministry declared on 15 December 2010 that the Centre agreed to permit exports of half million tonnes of sugar. The ministry also announced a Rs 90 per quintal hike in levy sugar (2.8 million tonnes annually) price to industry. The hike in price of levy sugar is expected to result in an additional outgo of around Rs 2500 crore for the Centre which buys from mills at subsidised rates for its welfare programmes. The hike will however ensure higher liquidity to the industry which had to supply bank guarantees on the ethanol front and higher borrowing limits to mills to facilitate early clearing of cane payment arrears to farmers.

Global white sugar prices are currently around $730/tonne. The global white sugar prices increased reacting mainly to some recent reports of low (23.5 million tonnes) Indian sugar production in 2010-11. The Food and Agriculture Ministry declared it to the 76th AGM of the Indian Sugar Mills Association (ISMA) that the sugar industry for the first time in 15 years was facing a situation of high domestic supply, tighter global supply and firm global prices and sugar export would be allowed from January 2010. ISMA is the national platform of private sugar mills.