| Date: |
19-12-2014 |
| Subject: |
Bitter-sweet: Brazilian sugar threat to Indian millers |
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NEW DELHI: The apex body of Indian sugar industry red flagged "challenging situation" for the sector due to falling prices of the sweetener, excess production and tightening of lending by banks that is forcing millers to sell at cheaper rates for generating cash-flow. The industry also expressed its fear of Brazil producing more sugar than ethanol because of falling crude price, which may make the situation worse for them.
Raising the fear from Brazil, which could have serious implications on the international price of the sweetener, Indian Sugar Mills Association (ISMA) president A Vellayan said, "On the international front, due to the steep fall in oil prices, there is clear possibility that what might happen in Brazil is the shift from ethanol to sugar production. With the Brazilian currency falling, the price of Brazilian sugar will be so cheap that it will threaten to come into India and despite the import duty, it will be cheaper than Indian sugar."
He said government must take all possible steps to ensure that no quantity of sugar gets imported. "That's why we are demanding 40% increase in import duty and extending the subsidy for export of raw sugar so that we can export our raw sugar before the prices fall further," Vellyan said.
Brazil is the biggest producer of sugar and ethanol as well.
Addressing the annual general body meeting of ISMA on Thursday, food secretary Sudhir Kumar said the issue of extending subsidy for exports of raw sugar in the current 2014-15 marketing year food secretary is under consideration. "There are different points of view. There are WTO implications...Whatever decision has to be taken will be taken soon. We are moving in that direction."
In February this year, the Centre had announced subsidy for exports of raw sugar up to 40 lakh tonnes during 2013-14 and also 2014-15 marketing years (October-September) to help the cash-starved industry to clear cane arrears to farmers. However, the scheme has not been extended after September this year.
"Now, the picture is clear. Our assessment is that the opening stock (as on October 1) was 72 lakh tonnes and going by production and consumption estimates, this year's closing stock could be around 74 lakh tonnes," he said, adding that there was scope for export of some quantity of sugar.
Citing how the sugar mills in Uttar Pradesh in particular are facing huge problem, ISMA vice-president Tarun Sawhney said about 50% of mills in the state have not got the loans from banks for working capital requirement. The body demanded that the government should create buffer stock of two million tonnes, hike in sugar prices sold through ration shops and creating infrastructure for 10% blending of ethanol in petrol.
Source : timesofindia.indiatimes.com
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