Food Secretary Sudhanshu Pandey said on Friday that a raise in the minimum selling price of sugar from the present Rs 31 per kg is unlikely because domestic prices are higher, and that he expects exports to reach 50-60 lakh tonnes in the current marketing year, which begins in October. Pandey, speaking at the Indian Sugar Mills Association (ISMA) 87th Annual General Meeting (AGM), said that ethanol blending with gasoline reached 8.1 percent in 2020-21, compared to the aim of 8.5 percent, and emphasised the need of meeting the 10% target this year.
He asked sugar mills to invest in ethanol storage capacity so that the green fuel may be delivered to OMCs on a regular basis. Pandey emphasised that the government stepped in to help the sugar business, which had been experiencing liquidity challenges due to excess output and low prices a few years ago.
“We’ve noticed that direct export support to the industry has roughly around Rs 13,000 crore in the last five to six years. And it didn’t stop there. The government also provided support for buffer stocks. When prices began to plummet, the Minimum selling price (MSP) concept was implemented to stop the downward trend. That was also a significant source of support for the sector at the time “he stated.
As a result, exports increased to over 70 lakh tonnes in the 2020-21 marketing year (October-September) from roughly 6.3 lakh tonnes in 2017-18, according to Pandey.
As per the secretary, about 35 lakh tonnes of sugar have already been contracted for export for the current season (2021-22). Brazil’s production will be reduced.
On the sidelines of the event, he added, “We should hit between 50 and 60 lakh tonnes (exports) this year.”
Pandey emphasised the importance of balancing India’s sugar supply with global market demand.
Approximately 20 lakh tonnes of sugar were diverted for ethanol production in 2020-21, with the number expected to rise to 35 lakh tonnes this year.
Pandey believes that by 2025, the goal should be to divert around 60 lakh tonnes of sugar, which is typically surplus in India. “The market prices will not rise unless we identify a strong revenue stream for the remaining surplus 60 lakh tonnes of sugar.”
Pandey emphasised the importance of aligning India’s sugar output to global demand.
In 2020-21, about 20 lakh tonnes of sugar were diverted for ethanol production, with the figure likely to increase to 35 lakh tonnes this year.
According to Pandey, the goal should be to divert roughly 60 lakh tonnes of sugar, which is generally surplus in India, by 2025. “Market prices will not rise unless we can find a reliable revenue stream for the remaining 60 lakh tonnes of sugar oversupply.”
The secretary, speaking on the margins of the event, stated that the MSP system was implemented while prices were falling, but that costs are currently rising.
When asked if the MSP system would be kept or scrapped, he said: “It depends on international market conditions, which country produces how much, and whether we have a surplus or none at all. It depends; at the time, MSP isn’t required.”
“Why something cannot be need based? You use it when it is required. Don’t use it until it’s absolutely necessary “Pandey made a statement. When it comes to ethanol, Pandey stated there were some supply issues near the end of the 2020-21 season.
“We were supposed to blend at 8.5 percent. However, we became stuck at around 8.1 percent blending. As a result, we must make amends. This year, we need to mix 10% of the time “he said, emphasising the importance of correcting irregularities.
Pandey emphasised the importance of increasing ethanol storage capacity and urged the sector to do so. “If we don’t crush and store enough, supplies will become unattainable in the later part of the year, when we are experiencing this period.”
As per the secretary, around 1,500 crore litres of ethanol will be required to reach the 20% blending target. About 760 crore litres must come from the sugar industry, while another 740 crore litres must come from the grain industry.
He noted that the grain capacity is around 260 crore litres and that it is gradually increasing. He stated that the food ministry does not anticipate any difficulties in obtaining the amount of ethanol produced by the sugar industry. According to the secretary, if 60 lakh tonnes of sugar are diverted as planned, Indian sugar will stay competitive in the global market. Pandey also mentioned the importance of transferring best practises from the sugar business to other cane-producing states.
He also asked the sugarcane industry to focus on water conservation and sustainable sugarcane cultivation by building a good micro irrigation system. Pandey also advised millers to concentrate on introducing new technologies to the industry as well as seeking out new prospects. According to him, the sugar sector must also promote sugar and its by-products effectively.
Sugar production is expected to stay steady at 31 million tonnes in the 2021-22 marketing year, according to the Indian Sugar Mills Association (ISMA). The entire amount of sugar available is expected to reach 39.5 million tonnes, with an initial stock of 8.5 million tonnes of sweetness.
Domestic consumption is expected to be 26.5 million tonnes, with exports expected to be 6 million tonnes. At the end of this marketing year, the closing stock would be 7 million tonnes.