Sugar mills worry over surplus, talk of ‘collapse’
With the availability of Indian sugar set to reach an unprecedented level of 44 million tonnes thanks to huge unconsumed stock from last year and expected higher production this year, an imminent threat of “industry collapse” is being talked about. This has pushed mills to consider producing globally-accepted high-quality refined sugar as the most promising way to dispose off the surplus. The decision of Brazil, the world’s largest sugar producer, to lower production this year has given Indian industry an opportunity to fill the space. However, it will have to live up to global expectations, the National Federation of Cooperative Sugar Factories (NFCSF) has said.
It said the mills are planning to boost their exports by improving quality of sugar to 45 ICUMSA grade, a high quality refined grade and considered one of the highest purity levels globally.
“Currently, we produce sugar whose grade is between 100-150 ICUMSA. Till now, the domestic consumption offset the domestic output. So Indian sugar mills never bothered about producing high refined quality sugar as per the global standards,” NFCSF Managing Director Prakash Naiknavare said.
ICUMSA is a global body and its rating is an international unit for expressing the purity of the sugar, which is directly related to the colour of the sweetener.
Brazil has decided to cut down sugar production by earmarking more cane for manufacturing ethanol, so India finds a space where the domestic surplus can be accommodated.
“To achieve it, we will have to produce sugar of 45 ICUMSA grade. It will take minimal efforts and capital to upgrade the existing machinery,” Naiknavare said.
India has a surplus (opening stock) of 10.5 million tonnes from the last season and it is expected to produce around 33.5 million tonnes of the sweetener in 2018-19 starting October.
So the total availability of sugar this year will be around 44 million tonnes against the expected domestic consumption of 26 million tonnes, thus putting a “burden” on the mills to clear huge sugar stocks in the backdrop of depressed retail prices — around Rs 37 per kg in the national capital compared to around Rs 40-43 a year ago.
As the sugar output in Brazil is to go down by almost 10 million tonnes, India is set to become the largest sugar producer in the world this year.
Naiknavare said it was “a god-sent” gift, which had provided India “with an opportunity to make perception that India can be a great destination” for high-quality refined sugar.