The sugar industry is reeling under an economic crisis due to the coronavirus. Mills are unable to sell the sugar amid lockdown, due to which sugar stocks are piling up in warehouses. The demand for sugar has been reduced as the industries like cold drinks, ice cream, bakeries, sweet shops and others are shut due to lockdown. Sugar mills are passing through a challenging time. In such situation, mills pin hope for relief from the government so they can start normal operations in the next season.
Speaking about the challenges and relief sugar mills require, in an interview with CNBC Awaaz, Prakash Naiknavare, Managing Director, National Cooperative Sugar Factories Federation said, “The situation was favourable for sugar mills till mid-March but it changed after the threat of coronavirus pandemic. The sugar prices were good and export was picking up. But after Covid-19 threat, the demand from Ice cream, sweet drink, other industrial sectors was reduced. Also, domestic consumption has come down by 20 lakh tonnes. This is happening for the first time. There were some difficulties in exports, but our food ministry timely intervened and exports picked up.”
“So far, contracts have been signed for exporting 42 lakh tonnes of sugar, and I think we will be able to export 50 lakh tonnes this season. Already, 37 lakh tonnes have been exported to Indonesia, Iran, Malaysia, Afghanistan and other countries”, he further added.
The balance sheet of the sugar industry has been significantly disturbed due to the Corona crisis. He said, “In this season we entered with 145 lakh tonnes of opening stock, and sugar production is around 265 lakh tonnes. So available sugar in this season is 410 lakh tonnes and considering Covid-19 impact sugar consumption is 240 lakh tonnes. 50 lakh tonnes of sugar export is expected. So as on September 30, our sugar closing stock would be 120 lakh tonnes. In the new season, we will enter with 120 lakh tonnes of sugar. And sugar production is expected at 300 lakh tonnes, it means total sugar availability would be 420 lakh tonnes. Domestic consumption is expected at 260 lakh tonnes and considering 40 lakh tonnes of sugar export, the closing stock would be again 120 lakh tonnes. This will definitely affect sugar prices.”
Speaking on the issue related to the hike in sugar MSP, Naiknavare said, “We have discussed the issue with Joint Secretary (Sugar) and Secretary (Food) through video conference and demanded to hike sugar MSP.” He pitched Rs 3450 for ordinary S Grade sugar, Rs 3600 for special S Grade sugar and Rs 3750 for M Grade sugar.
He said, “We also discussed the issue of dual pricing for sugar and suggested to have different prices for industrial and household use. We have also advised that an inter-ministerial group should be formed because the work related to sugar production is not linked only to one ministry but to the several ministries. It will help in discussing the issue related to the sugar industry.”
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