Sugar export curbs and their impact

Sugar export curbs and their impact

✅The government Tuesday decided to “restrict” the export of sugar, effective from June 1.

✅The curbs, the first such move in four years, have been ordered to maintain “domestic availability and price stability of sugar”.

✅India is the biggest producer of sugar and the second largest exporter after Brazil.

● What are the latest curbs?

✅The government has moved export of sugar from the ‘open category’, which requires no government intervention, to ‘restricted’ category.

✅This means that export of sugar is allowed only with specific permission from the Directorate of Sugar, Department of Food and Public Distribution (DFPD), Ministry of Consumer Affairs, Food & Public Distribution.

✅Also, the curbs come into effect from June 1 and will continue till October 31, or until further orders.

● Current Status:

✅The industry has contracted export orders of 90 lakh tonnes out of which 71 lakh tonnes have been shipped out of the country.

✅From June 1, permission to export would be required for both the pending contracted quantity and any new contracts entered by mills.

● How much did India export during the last few seasons?

✅The bumper crops over the last four seasons, exports too boomed.

✅The Centre also extended subsidies to millers to push sales abroad.

✅Before the start of the sugar season (October to September every year), the central government would announce both the quota for export and the subsidy to achieve the target.

✅In 2017-18, the government set a target to export 20 lakh tonnes of sugar and sanctioned a budget of Rs 1,540 crores to handle internal transport, freight, handling and few other operations.

✅For that season, the industry recorded exports of 6.2 lakh tonnes and with a reported expenditure of Rs 440 crores of the subsidy budget.

✅For the next season (2018-19), 50 lakh tonnes export target was set with a subsidy budget of Rs 5,538 crores, of which 38 lakh tonnes of sugar was shipped out using R 4,263 crores of the subsidy.

✅After a bumper crop in 2019-20, export quota was hiked to 60 lakh tonnes with a subsidy budget Rs 6,268 crores. Millers clocked exports of 59.60 lakh tonnes using up Rs 6,225 crores of the subsidy budget.

✅The traction in the international market helped sugar exports touch 70 lakh tonnes in 2020-21, out of which 60 lakh tonnes was done using Rs 3,500 crores of government subsidy and 10 lakh tonnes was exported without any government aid.

✅The export without government subsidy was done under the open general license regime.

✅The current season (2021-22) has seen millers enter into contracts to export 90 lakh tonnes of sugar. Out of this, 71 lakh tonnes of sugar has already left the country.

● Reason for bumper exports:

✅Brazil produced more ethanol than sugar given the exceptional rise in fuel prices.

✅Drought hitting other big sugar producers like Thailand helped India venture in countries which otherwise were dependent on Brazilian sugar.

✅International sugar prices have continued to be bullish. Exports have helped millers ensure that farmers are paid on time.

● Why the curbs, now?

✅Exports, industry insiders say, can continue unabated given the international demand.

✅But for the government, a possible worry is low stocks at the beginning of the next season.

✅This can lead to supply constraints for around three months.

✅The sugar season officially starts in October, but picks up momentum only after December.

✅If there is scarcity of back-up stocks during this period then prices can escalate in the domestic market.

✅Retail sugar prices have been almost stagnant year-on -year hovering between Rs 39.50 to Rs 41 per kg.

● Prelims takeaway:

✅Export Quota

✅Sugarcane crop

✅Sugar export and ethanol

● Mains Question:

✅Q. The Sugar export from the country has been on the rise with policy support and rising commodity prices in the international market working as a booster in recent sugar exports. Briefly analyze various aspects of sugar export.

SOURCE - INDIAN EXPRESS