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    UP mills want to make more raw sugar to step up exports

    Synopsis

    Government of India has allowed export of 6 million tonnes of sugar during 2019-20 under Maximum Admissible Export Quota (MAEQ) to help deal with the surplus sugar stocks in the country.

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    PUNE: As the working capital requirements of sugar mills in Uttar Pradesh have increased due to higher sugar production and restrictions on domestic sales imposed by the government by way of monthly quota, the industry is trying to maximise sugar exports. As the sugarcane crushing season will soon come to an end closing possibilities of producing raw sugar for exports, north Indian sugar millers are looking forward to getting additional export quota.

    Government of India has allowed export of 6 million tonnes of sugar during 2019-20 under Maximum Admissible Export Quota (MAEQ) to help deal with the surplus sugar stocks in the country. After the first quarter of the sugar season that started October 1, sugar millers from Uttar Pradesh, the largest sugar producing state of the country have contracted for export of about 70% to 80% of the quota allocated to the state. Whereas, their counterparts in Maharashtra have contracted for barely about 25% of the state's cumulative export quota.

    The central government has started the process of collecting the actual export figures from individual mills, after which, it will do re-allocation of the quota to the sugar mills who will demand more quota for export or who have already exported most of their allocated quota. Sources in the industry claimed that the officials have started working on a formula for re-allocation of the export quota.

    Vivek Pittie, president, Indian Sugar Mills Association (ISMA) and director, Harinagar Sugar Mills from Bihar said, ""Many sugar mills from north India may be open to getting more export quota. My own mills has contracted 95% of the export quota and would like to export more sugar because our inventories are high. There is problem of storage and we will like to liquidate the stocks as fast as possible. The quality of the sugar deteriorate we store it for longer period and later have to sell it at a discount."

    As per the industry sources, sugar mills from Maharashtra have contracted for about 5 lakh tonnes of sugar from the 18 lakh tonnes of the state's quota, while the UP millers have contracted for export of about 15 lakh tonnes to 18 lakh tonnes of sugar from their quota of 22.4 lakh tonnes.

    Industry leaders say that the current realisation from exports is more profitable than the domestic trade. Prakash Naiknavare, managing director, National Federation of Cooperative Sugar Factories said, "To arrive at the export rate for our white sugar, we discount $30 from today's (free on board) FOB rate of $414/tonne for the refined sugar and get a rate of $ 384/tonne, which is about Rs.27371/tonne. After deducting Rs.2500 towards transport, handling & port expenses, net realisation of sugar mills comes to Rs.24871/tonne. If we add Rs.10450/tonne of subsidy, we arrive at export realisation of Rs.35321/tonne which is much more than the current realisation of Rs 3150/tonne in the domestic market."

    Delay in payment of the subsidy amount by the central government for last year's exports is one of the reasons holding Maharashtra's sugar millers back from exporting, said Naiknavare.
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