Sixteen state mills Monday received an additional export quota of 94,000 tonnes each after the Centre reviewed and distributed export quotas of sugar mills across the country. The move comes after the central government re-allocated a total of 6.11 lakh quota from mills which had failed to export 20 per cent their quota yet.

With the additional allocation, sugar millers expect better returns from exports which, they say, might also enable better realisations and in turn can help them pay higher prices to farmers. To reduce the sugar inventory, the central government had announced a special incentive-driven export scheme and has targeted exports of around 60 lakh tonnes of sugar for the current season. During the 2018-19 season, the central government had launched a similar scheme with an aim of evacuating 50 lakh tonnes of sugar, but only 37 lakh of the sweetener had left the country. This year, till date contracts worth 32 lakh tonne have been executed of which 18 lakh tonnes have already left the country.

Majority of the contracts were cornered by the mills in Uttar Pradesh, whose quota is larger given the larger inventory with them. While mills in Maharashtra have been slow in executing their contracts, it is expected to get onto the export bandwagon with a current price rise.
February has seen a steady rise in international sugar prices with raw sugar trending over 15 cents per pound-mark. Price of white refined sugar is also over the $410 per tonne-mark which results in realisation of around Rs 34,000 per tonne for sugar millers. This is better than the Rs 31,000-32000 per tonne price that mills are commanding in the domestic market at present.

Prakash Naiknaware, managing director of National Cooperative Sugar Factories Federation, said mills in the state would be able to export better and get more re-allocated shares in the next turn.

The better realisations, mills said, might allow them to improve on their payment history to cane growers. As of February 15, the 140 sugar mills operational in the state were expected to pay Rs 7,633.70 crore in way of the government declared Fair and Remunerative Price (FRP) for cane procured from growers. However, mills have managed to pay Rs 6,780.59 crore — with the cane dues being Rs 853.21 crore in the state.

“In case exports are robust, this situation might change,” said a Kolhapur-based sugar miller.