Retail sugar prices unlikely to surge due to exports: ISMA

Sugar prices in retail markets are unlikely to surge due to an additional export of five lakh tonne of the sweetener, an industry body ISMA has said.

Last month, the government allowed export of five lakh tonne of more sugar under the open general licence (OGL) in view of higher domestic production this year. It had earlier permitted 5,00,000 tonnes of shipment in April.

"...there has been no increase whatsoever in the retail price of sugar since announcement of export of sugar under OGL. We do not think that there should be any major spurt in retail prices," Indian Sugar Mills Association (ISMA) Director General Abinash Verma said in a representation to the Food Ministry.

After the announcement of sugar exports, retail prices of the sweetener have remained stable in major metros, he said, adding that rather prices have fallen by Rs 1/kg in Bangalore.

Retail prices of sugar have remained unchanged at Rs 32/kg in Delhi and Kolkata, Rs 31/kg in Mumbai, Rs 29/kg in Chennai and Rs 28/kg in Bangalore after the government's decision on exports taken last month, the ISMA said quoting the Consumer Affairs Ministry data.

ISMA further said export of additional quantity of sugar has ensured that ex-mill price do not fall further. Mills were losing Rs 3/kg in comparison to the cost of production because of the wide gap between the ex-mill and retail prices of sugar, it added.

"Improvement of ex-mill prices would only improve the cash flow of the sugar factories and help to start crushing in time for 2011-12 sugar season and ensure that cane farmers are paid adequately and on time," Verma noted.

After a gap of two years, the country's sugar production is set to exceed the demand at 24.2 million in the 2010-11 season (October-September), as against around 19 million tonne last year. Annual demand is pegged at 22-22.5 million tonne.