Sugar Exports

8/8/2019 Sugar Exports

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Should India Export At The Riskof

Fuelling SUGAR Prices At Home..?

Group EGroup ERachna AroraRachna Arora

Raksha KashyapRaksha Kashyap

Robin ThomasRobin Thomas

Rohin KhannaRohin Khanna


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AgendaAgenda

Sugar Industry An Overview Sugar Industry An Overview Current ScenarioCurrent Scenario - - DomesticDomestic

-- InternationalInternationalPrice Trends Effect and Importance Price Trends Effect and Importance Key ChallengesKey Challenges

OutlookOutlook


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Sugar Industry An OverviewIndia largest consumer, second largestproducer.2nd largest agro industry after cotton.Annual Turnover Rs. 150 bn525+ operating sugar mills.45 million sugarcane farmers, workers,

labourers etc.Sugarcane producing States U.P,Maharashtra, Karnataka, Tamil Nadu etc.


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Sugarcane Production

Requires Tropical Climate.

Requires plenty of water.

Sugarcane Season Cultivation starts inJune.

Crushing Season Starts from October.


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G overnment Regulation on Sugar

#1Sugarcane procurement

Concept of Command Area which binds Cane farmers and

Sugar mills to sell and buy from each.

Sugar mills have to purchase all the Cane sold to them, even if Sugar mills have to purchase all the Cane sold to them, even if it exceeds their requirement.it exceeds their requirement.

In case of capacity expansions at existing Sugar mills, there isuncertainty regarding allocation of additional Area based onthe expanded capacity.


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#2Sugarcane pricingG overnment administered Statutory MinimumPrice (SMP) which acts as a floor.

States like UP, Haryana and Punjab fix a higher price for cane, called the State Advised Price

(SAP). . Historically, the SAP has been as highas 20-30% above SMP.


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#3Sugar salesG overnment mandates 10% of sugar to be

sold as levy quota sugar at prices muchlower than the market.

The government also specifies monthlyrelease quotas for free sale sugar.


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#4Capacity and ProductionSugar producers are not allowed to own

cane fields in India.

New sugar mills cannot be set up within

15 km of existing units.


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#5E xports & ImportsImports of both raw and white sugar attract abasic duty of 6 0% and a countervailing duty of

Rs. 9 10 per ton.

In periods of sugar shortage, under the Advanced License Scheme (ALS), license

holders can import raw sugar without paying anyduty, subject to the condition that they re-exportwhite sugar within a fixed period.


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Sugar Cane Production India

Source: USDA India Report 2010

Cane for Sugar Cane for Sugar 65% of total cane production.65% of total cane production.

Sugar extraction rate 10Sugar extraction rate 10- -12%.12%.

Sugarcane production for 2010Sugarcane production for 2010 325 Million Tons325 Million Tons

CropCrop 48 Lakh Hectares48 Lakh Hectares

ncreasing trend in culti ation and production of sugarcane

260,000

280,000

300,000

320,000

340,000

2,008 2,009 2,010

' 0 0

0 T o n s

3,8004,0004,200

4,4004,6004,8005,000

' 0 0 0 H e c

t a r e s

Ar H r s ' 000 H c r s RH ro c io i '000 MT L H


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Sugar Production India

Source: Ministry of Agriculture.

R r r

0

5

10

15

20

25

30

2007-08 2008-09 2009-10 2010-11

M i l l i o n

T o n s

Suga r

r uction in M


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D omestic Sugar Price MovementD omestic Sugar Price Movement

Source: ncdex

Price ren o Sugar over t e Years

0

500

1000

1500

2000

25003000

3500

4000

4500

Jan Feb Ma r pr May Jun Jul Aug Se p c N e c

P r i

P e r

200 200 2010


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Recent Scenario

Estimated Sugar Production for currentseason starting from Oct 1, 2010 27 .5MT (Estimated - MoA)

Domestic Demand Around 25.5 MT

Surplus 2.5 MT


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Sugar Bitter or Sweet?Weight in WPI 3.4%

Since September 2010 1. 7 %

Political Outlook

From FarmersViewpoint

Source: Ministry of Agriculture.

Sugar MSP per Quintal

0

50

100

150

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

R u p e e s

Sugar MSP per Quintal


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Sugar Exports and ImportsIn terms of value

Source: Ministry of Commerce

Export-Import Trend show Inverse Relation

0.00

100,000.00

200,000.00

300,000.00

400,000.00

500,000.00

600,000.00

700,000.00

2005-06 2006-07 2007-08 2008-09 2009-10

L a k h R u

p e e

s

Import of Sugar in Lakh Rupees Export of Sugar in Lakh Rupees


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Imports and Exportsin terms of quantity

Falling Imports

0

1

2

3

4

5

2008-09 2009-10 2010-11

M i l l i o

n T

o n s s

Imports in Million Tons

Source: The Hindu Businessline

Trend of Exports before 2009-10

0

1

2

3

4

5

6

7

2006-07 2007-08 2008-09

M i l l i o n

T o n s

E xp ts n m n t n s


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Major Sugar Producers(Projected 2010-11)

World Wide S u a r Prod u io n

39 4

25 7

12 7

7 6 6 95 5

B r az il I n di a C h in a US

h a il a n d Mexico

M i l l i o n

o n s

Source: USDA 2010 Report


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G lobal Scenario

2009/10 2008/09(I n MT)

Production . . 8Consumption . 8 .

Surplus / Deficit - . - .

Source: ISMA

W orld Sugar Production 2010W orld Sugar Production 2010- -1111 168.8 MT168.8 MT


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World Sugar PricesT r e nd W r l d Fu ur es S ug r P r ic es

0

5 00 0

1 0000

15 00 0

2 0000

25 00 0

3 0000

35 00 0

12 11 1 0* 12 11 1 0* 12 11 1 0* 12 11 1 0* 12 11 1 0*

DEC 1 0 M AR'11 M AY'11 AU '11 ! CT '11

I n

"

u p e e

#

0

100

2 00

3 00

4 00

5 00

600

7 00

800

I n

U S D

Rs. $So $ r % & : ' S M AOn ontra t f o r 1 m tri t onOn ontra t f o r 1 m tri t on


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Key Challenges

Increasing sugar productionIncreasing sugar production reducingreducinginefficiencies, likely consolidation ininefficiencies, likely consolidation inindustry.industry.Increase in cane production incentives tofarmers switching to other crops.Limitation in cane productionLimitation in cane production Yield,Yield,Climate.Climate.Adding capacities new refineries.


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OutlookSugar Closing Balances 5.5MT (Current year)(Sufficient for single quarter consumption in India)

G roup of minister to decide on Sugar Exports, awaiting

revised estimates

G overnment to decide in favour of sugar exports if estimates show an excess production over domesticdemand

Sugar Exports can be in the range if 2 to 2.5 Million Tonsif allowed at all


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Thank You

Documents

Sugar Exports