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Sugar Sector Analysis

Background and measures taken by Govt in Sugar Season 2017-18:

Due to depressed market sentiments and crash in sugar prices, the liquidity
position of sugar mills was adversely affected in the sugar season 2017-18 leading to
accumulation of dues of sugarcane farmers.
In order to stabilize sugar prices at reasonable level and to improve the liquidity
position of the mills, for the current sugar season 2017-18, Central Government took the
following measures:
(i) Increased custom duty on import of sugar from 50% to 100%
(ii) Withdrew custom duty on export of sugar
(iii) Allocated mill-wise Minimum Indicative Export Quotas (MIEQ) of 20 LMT of
sugar for export during Sugar Season 2017-18.
(iv) Re-introduced Duty Free Import Authorization (DFIA) Scheme in respect of sugar
to facilitate and incentivize export of surplus sugar by sugar mills.
(v) Extended financial assistance to sugar mills @ Rs.5.50/qtl of cane crushed during
2017-18 Sugar Season to offset the cost of cane.
(vi) Notified Sugar Price (Control) Order, 2018 directing that no producer of sugar shall
sell white/refined sugar at factory gate at a rate below Rs. 29/kg; along with imposition of
stock holding limits on mills.
(vii) Created buffer stock of 30LMT of sugar w.e.f 01.07.2018, to be maintained by sugar
mills for one year for which Government will bear carrying cost.
(viii) In order to augment ethanol production capacity, approval given to grant soft loan of
Rs. 4440 crore through banks to the mills for setting up new distilleries/ expansion of
existing distilleries and installation of incineration boilers or installation of any method as
approved by Central Pollution Control Board for Zero Liquid Discharge.
Measures taken by Govt in Sugar Season 2017-18:
It is expected that there will be a stock of 165 lakh tonnes of sugar by October 2019. The
Government has increased the target of sugar exports to 50 lakh tonne (including raw &
refined sugar etc) and has given further incentives like sharing of freight charges and
handling charges to promote exports.
Incentives provided by GOI for export of Sugar
Total assistance of over Rs. 5500 crore to support the sugar sector
·0 Assistance to sugar mills towards internal transport, freight, handling and other
charges to facilitate export during the sugar season 2018-19 :
·1 Rs. 1000/MT for the mills located within 100 kms from the ports,
·2 Rs. 2500/MT for the mills located beyond 100 kms from the port in the
coastal states
·3 Rs. 3000/MT for mills located in other than coastal states or actual
expenditure, whichever is lower.
·4 To provide financial assistance @ of Rs. 13.88 per quintal of cane crushed in
sugar season 2018-19 to sugar mills to offset the cost of cane. The assistance shall
be provided to mills fulfilling the conditions stipulated by Department of Food &
Public Distribution.
c) Both the assistance would be credited directly into the accounts of farmers on
behalf of sugar mills against cane price dues payable to farmers against FRP
Conditions stipulated by Department of Food & Public Distribution
·5 Mills are required to export 16.7 Kg of sugar per MT of actual cane crashed or
MIEQ which ever is lower.
·6 New mills starting production for first time has to export 15% of production
·7 Quotas are mutually tradable
·8 Proof of export to be submitted to DF&PD which includes tripartite agreement
between Quota holder mill, Exporter and sourcing Mill.
·9 Last date to undertake export is 30.09.2019
International News
Global Sugar Alliance for Sugar Trade Reform and Liberalization is filing a complaint
with the World Trade Organization over India's recently announced subsidies to
facilitate export of up to 5 mln tn of Sugar. The global sugar body is headed by leading
sugar producers Brazil, Australia, Guatemala, Colombia, Chile, Canada and Thailand.
Export Price Parity
For Season 2017-18 (Refined)

Ex- Mill Price (Rs/MT) 29000

Subsidy @ Rs 5.5 per qtls Cane Crashed (7700)

Transportation and FOB charges INR per MT 2500

Total Cost of FOB (INR/MT) 23800

Estimated FOB in USD at Indian Port USD 320 per MT

Exchange Rate (Rs 74.2 per USD)

International FOB (USD) 350-355

For Season 2018-19 (Refined) Estimates

Ex- Mill Price (Rs/MT) Floor Price 29000

Subsidy @ Rs 13.8 per qtls Cane Crashed (8320)

Transport Subsidy(Min.) (2500)

FOB charges INR per MT 2500

Total Cost of FOB (INR/MT) 20680

Estimated FOB in USD at Indian Port USD 279 per MT

Exchange Rate (Rs 74.2 per USD)

International FOB (USD) 350-355

Sugar Imports by Country

Below are the 15 countries that imported the highest dollar value worth of sugar during
·10 Indonesia: US$2.3 billion (7.8% of total sugar imports)
·11 United States: $1.7 billion (5.7%)
·12 Bangladesh: $1.10 billion (3.7%)
·13 China: $1.08 billion (3.6%)
·14 United Arab Emirates: $1 billion (3.4%)
·15 Algeria: $988.4 million (3.3%)
·16 Malaysia: $917.8 million (3.1%)
·17 Italy: $903.6 million (3%)
·18 South Korea: $850.1 million (2.8%)
·19 Egypt: $799.8 million (2.7%)
·20 India: $774.5 million (2.6%)
·21 Spain: $654.7 million (2.2%)
·22 Saudi Arabia: $604.5 million (2%)
·23 Kenya: $575.3 million (1.9%)
·24 Iraq: $557 million (1.9%)
The listed 15 countries purchased roughly half (49.7%) of all sugar imports in 2017.

Among the above countries, the fastest-growing markets for sugar since 2013 were:
Egypt (up 345.2%), Kenya (up 226.8%), India (up 107.8%) and Bangladesh (up 67.7%).

Those countries that posted declines in their imported sugar purchases were: China (down
-47.9%), Spain (down -36.9%), Saudi Arabia (down -33.1%) and Italy (down -33%).