Indian miller sees big sugar export opportunities to Malaysia, China, others

  • Business
  • Thursday, 19 Nov 2015

LONDON: Malaysia, China, Indonesia, and Bangladesh offer big potential for Indian sugar exports, a senior Indian miller said on Wednesday, with his country on track to become a net exporter of the sweetener in coming years.

Abinash Verma, director general of the Indian Sugar Mills Association (ISMA), said Indian sugar exports to those four markets are still modest, but could rise. He gave no figures.

India's sugar industry, which has a big impact on global prices because it swings between net importer and net exporter, has been hit by low sugar prices and a global glut.

In September, the government announced new rules making it compulsory for sugar producers to increase exports to at least 4 million tonnes in the current crushing season to cut stockpiles as the country faces a sixth year of surplus.

"India produces high quality raw sugar that can compete with Brazilian supplies," Verma told Reuters on the sidelines of the International Sugar Organization seminar.

In a speech at the seminar on Tuesday, Verma said India, the world's biggest sugar producer after Brazil, would become a net exporter in coming years, barring an extreme weather event.

"A surplus is expected in the next few years at least," Verma said, adding that he expects surpluses to average about 10 percent of annual domestic production.

India mainly exports white sugar, and mills will need to meet sugar export targets set by the government for 2015/16.

For many producers in India, the world's biggest consumer of sugar, exports are not viable because global prices are lower than local prices.

Verma said Indian mills would have to achieve 80 percent of their export quotas in order to comply with government targets.

Earlier on Wednesday, government sources said India would, for the first time, pay sugarcane farmers in part for produce they sell to money-losing mills.

The government would directly pay farmers 45 rupees ($0.68) for every tonne of cane produced, leaving mills to bear the rest of nearly 98 percent of the cost, one of the sources said, aimed at wooing politically influential growers and helping sugar companies recover from the global glut.

Verma said Indian mills faced a disadvantage in terms of potential raw sugar exports to Indonesia.

Thai exporters are benefitting from a 5 percent Association of Southeast Asian Nations raw sugar import duty into Indonesia in 2015 and 2016, down from 10 percent in 2014, 15 percent in 2013 and 20 percent in 2012.

Verma said he would favour improved trade access for Indian sugar to markets in the South Asian Association for Regional Cooperation (SAARC), such as Bangladesh and Sri Lanka- Reuters
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