An Indian trade body said on Monday, April 6, 2020, that Indian mills have agreed on contracts to export 3.75 million tons of sugar for the current financial year for 2019/20 which was began on October 1, 2019. The production of sugar was put on hold due to the government’s policy of national lockdown for 21 days to contain the spreading of the virus outbreak.
Sugar Exporting and Crucial Problems
Praful Vithalani, the president of the All India Sugar Trade Association (ASTA), told Reuters that out of the total target, Indian mills have already produced a large amount of sugar and shipped out 2.86 million tons. Vithalani said that Indian sugar exports would be set to reach in four destinations including Iran, Somalia, Malaysia, and Sri Lanka.
Vithalani projected, “We believe that India will be able to export between 4.3 million and 4.5 million tons of sugar this year.” Earlier on March 23, a senior industry official forecasted a similar estimation projecting that Indian mills looked likely to export 4.5 million tons in 2019/20, down almost a fifth from an earlier estimate.
However, a 21-day national lockdown imposed by the India government under the leadership of Narendra Modi on March 25 in respect to prevent the spread of the coronavirus has caused a slowdown of the production of sugar due to a severe labor shortage, which also led to slowing down port operations and hampering the movement of goods.
Vithalani said, “There were hiccups. And traders are still facing difficulties in transportation and the processing of papers. But the situation has improved of late due to a series of steps initiated by the government,” He added, “More or less, exports should be okay, but the next couple of weeks will be crucial.”
New Delhi’s Subsidy to Reduce Debt
For the financial year 2018/19, India had set an export target of 5 million tons but mills managed to export only 3.8 million tons despite incentives provided by New Delhi. The Indian government, in a bid to reduce that debt and pare rising inventories of the sugar industry, has approved a subsidy of 10,448 rupees ($145) a ton for exports of 6 million tons in the 2019/20 season.
Reuters reported, “On Friday, May raw sugar settled up 2 cents, or 0.2%, at 10.31 cents per lb., rising for the second consecutive session, and May white sugar settled down $4.10, or 1.2%, at $336.50 a ton.” Reuters added, “Lower sugar exports from India, the world’s biggest producer of the sweetener, could buoy benchmark global prices in New York and London.”
A source described that delay in bumper cane harvests and record sugar production have hampered Indian sugar prices, which made mills difficult to pay money owed to farmers, who form an influential voting bloc for the sugar companies in India.
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