Sugar sub­sidy: In­dia’s try­ing to race Brazil by rush­ing ex­ports

Fiji Sun - - Internatio­nal Business - Feed­back: [email protected]­jisun.com.fj

In­dian sugar mills are try­ing to lock in deals with buy­ers from China to Iran to be­gin ex­ports from Oc­to­ber 1, when fresh gov­ern­ment sub­si­dies kick in.

The millers will start ship­ping from the coun­try’s record stock­piles in­stead of wait­ing for the new sugar crop to be­come avail­able to fully use the time it has un­til April, when supplies from ri­val Brazil start to flood the mar­ket, ac­cord­ing to an in­dus­try as­so­ci­a­tion. Pro­duc­ers are talk­ing to im­porters in West Asia, China, East Africa, Bangladesh, Iran and Sri Lanka with a view to start­ing ship­ments from next

month, the be­gin­ning of the new season, Abi­nash Verma, direc­tor gen­eral of the In­dian Sugar Mills As­so­ci­a­tion, said in an in­ter­view.

Higher ex­ports may put further pres­sure on global prices that are hov­er­ing near a oneyear low, further ir­ri­tat­ing ma­jor grow­ers. Aus­tralia, Brazil and Gu­atemala have jointly asked the World Trade Or­ga­ni­za­tion (WTO) to set up a panel to chal­lenge In­dia’s sub­si­dies. In­dian millers say the coun­try has been strug­gling with huge stock­piles be­cause of bumper out­put in re­cent years and an in­crease in ship­ments could help ease their pain. In­cen­tives

The gov­ern­ment ap­proved in­cen­tives worth Rs 6,268 crore last month to sub­sidise ex­ports of as much as 6 mil­lion tonnes of sugar in 2019-20. The gov­ern­ment will re­im­burse a por­tion of lo­cal and ocean freight charges and ex­penses re­lated to han­dling, upgrading and pro­cess­ing sugar.

The move is aimed at cutting huge sugar re­serves. Open­ing stock­piles at the start of the 2019-20 season is ex­pected to be 14.2 mil­lion tonnes, be­fore further swelling to 16.2 mil­lion tonnes at the end of the year, ac­cord­ing to the gov­ern­ment In­ven­to­ries are ex­pected to re­main high de­spite pre­dic­tions that sugar out­put may drop to a three-year low of 28.2 mil­lion tonnes in 2019-20 from a record of 32.95 mil­lion tonnes this year af­ter dry weather parched fields in some ma­jor grow­ing ar­eas, ac­cord­ing to the as­so­ci­a­tion.

Sugar ex­ports may climb to 3.7 mil­lion-3.8 mil­lion tonnes this year, with the mills ask­ing the gov­ern­ment to help ship a record 7 mil­lion tonnes in 2019-20.

Abi­nash Verma, direc­tor gen­eral of the In­dian Sugar Mills As­so­ci­a­tion, said sugar pro­duc­ers are talk­ing to im­porters in West Asia, China, East Africa, Bangladesh, Iran and Sri Lanka with a view to start­ing ship­ments from next month.

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