Food Secretary Sudhanshu Pandey said on Friday that a hike 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 sugar exports to reach 50-60 lakh tonnes in the current marketing year, which begins in October. Pandey, speaking at the Indian Sugar Mills Association's (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 urged 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 financial challenges due to excess output and low prices a few years ago.
"We've noticed that direct export support to the industry has totaled over Rs 13,000 crore in the last five to six years. And it didn't stop there. The government also provided help 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 consequence, 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.
According to the secretary, about 35 lakh tonnes of sugar have already been committed 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 amount expected to rise to 35 lakh tonnes this year.
Pandey believes that by 2025, the goal should be to redirect around 60 lakh tonnes of sugar, which is typically excess in India. "The market prices will not rise unless we identify a strong income stream for the remaining surplus 60 lakh tonnes of sugar."
Domestic sugar demand, he added, has remained stable at roughly 260 lakh tonnes.
Pandey responded to the sugar industry's demand for a hike in the MSP to Rs 36-37 per kg from the existing Rs 31 per kg: "...there is no need for a minimum selling price because of this diversion and good export. Because natural prices have risen in the market, and prices are now readily in the region of Rs 34-35 (per kilogramme)."
"Indian sugar is finding a good market price in both the local and foreign markets," he noted. The secretary, speaking on the margins of the event, stated that the MSP system was implemented while prices were decreasing, but that costs are currently rising.
When asked if the MSP system will be kept or eliminated, he said: "It depends on worldwide market conditions, which country produces how much, and whether we have a surplus or none at all. It varies; at the time, MSP wasn't required."
"Why can't anything be founded on a need? You utilise it when it is required. Don't use it until it's really necessary, "Pandey made a statement. When it comes to ethanol, Pandey stated there were some supply issues near the conclusion of the 2020-21 season.
"We were meant to mix at 8.5 percent. However, we were stuck at around 8.1 percent mixing. As a result, we must make amends. This year, we need to mix 10% of the time, "he said, emphasising the need of correcting irregularities.
Pandey emphasised the need 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."
According to the secretary, around 1,500 crore litres of ethanol would be required to reach the 20% blending objective. About 760 crore litres must come from the sugar industry, while another 740 crore litres must come from the grain industry.
He stated that the food ministry does not anticipate any difficulties in obtaining the amount of ethanol produced by the sugar industry. Pandey also mentioned the importance of transferring best practices from the sugar business to other cane-producing states.
He also urged the sugarcane industry to focus on water conservation and sustainable sugarcane farming by building a good micro irrigation system.
Sugar output 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.
