After the ban on wheat exports, Prime Minister Narendra Modi-led government decided to restrict the overseas sale of sugar. Common men were apprehensive about whether India had storage of essential food items. The government decided to restrict overseas sales of the two food items within a gap of 11 days to ensure domestic supplies at affordable prices for the public.
The decision to ban wheat arose as heatwaves hit the production during the final maturing stage of the grain. There was no such production shortfall for sugar, but the export ban was aimed to eliminate speculators and hoarders from manipulating domestic supply scenarios by taking advantage of a deficit in the global sugar production arising due to a production shortfall in Brazil world leader in sugar production.
The ban on wheat exports was announced on May 13, while the news of the curb on sugar exports came on May 24.
Let’s now glance over what was announced for the curb on sugar exports.
India, the world’s second-biggest producer and exporter of sugar after Brazil, has decided to restrict the sweetener exports from June 1.
The move to restrict sugar exports was made to ensure domestic supplies at affordable prices during the lean season that runs from June to the festival season in October.
In April, the food inflation hit a multi-year high of 8.9%, prompting the government to put export restrictions on wheat and sugar in May to douse off any negative supply sentiments in the domestic markets.
India’s sugar marketing year runs from October to September.
India is committed to stabilising domestic sugar prices during the lean season running up to the festival season, said Sudhanshu Pandey, the country’s food secretary.
The country’s festival season runs from October to November, when the domestic sugar demand reaches its peak. The festival season demand for sugar peaks during Diwali, the festival of lights.
The period between June and October is treated as the lean season for production as no fresh sugar supplies are added to the stocks.
India will restrict overseas sales of sugar from June 1, an order of the Directorate General of Foreign Trade (DGFT) said on June 24, in an attempt to contain the high food price that led to inflation in Asia’s third-largest economy.
The curb on sugar exports (raw, refined, and white) will be valid until October 31, 2022.
The order said that the latest restriction would not apply to sugar meant for exports to the European Union and the United States under a special quota.
After June 1, sugar exports would be allowed with specific permission, the food secretary said.
The global supply situation reflects a sugar shortage due to lower production in Brazil. The basic aim of regulating sugar exports is to safeguard domestic supply by ruling out any sentiments of shortage in the market.
Global farm commodities prices came under huge pressure after Russia had invaded neighbour Ukraine in the last week of February. In March, global crude prices hit a multi-year high while several countries imposed export bans on essential food items to ensure local supplies. Overall, high prices ruled over the world.
As a pre-emptive step, India restricted the overseas sales of farm commodities like wheat and sugar to erase negative sentiments about supply shortages in domestic markets.
In 2021-22, India will allow sugar exports of up to 10 million tonnes, the first-ever cap in six years on sugar exports.
India exported a record 8.2 million tonnes until May 25, out of total export deals of 9 million tonnes for the current year (2021-22), according to the food ministry’s latest update on May 25.
India exported 7 million tonnes in 2020-21 compared with around 6 million tonnes in 2019-20.
The major export destinations for Indian sugar include Indonesia, Sri Lanka, Bangladesh, the UAE, Malaysia, and African nations.
“The record sugar exports will benefit all the stakeholders – cane farmers and the sugar industry,” said Aditya Jhunjhunwala, President of the Indian Sugar Mills Association (ISMA).
India’s sugar production is estimated to be 35.5 million tonnes in 2021-22 after discounting the diversion of 3.5 million tonnes for ethanol production, according to the food ministry,
India’s sugar production in 2021-22 is expected to be 17% higher than the previous sugar season (2020-21), it said.
The government’s priority was to ensure sufficient sugar availability for consumption at a reasonable rate, said Pandey, the food secretary.
Thereafter, maximum sugar to be diverted to ethanol, he added.
The official estimates put India’s average monthly sugar consumption at 2.3 million tonnes.
India is the world’s No. 1 sugar consumer, with 27.8 million tonnes of annual consumption.
Sugar consumption in India is growing at a 2%-4% annual rate.
India’s per capita sugar consumption stands at 20 kilograms, lower than the world average of around 21 kilograms.
(The writer is a Delhi-based senior journalist)