Container shortage hits sugar exports; govt to hold meet today

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The government has fixed the target of exporting 60 lakh tonne of sugar so that liquidity position of sugar mills can be maintained and cane arrears of farmers do not get accumulated.

Sugar exports this season have been affected by container shortage. This shortfall comes in the wake of hopes that sugar miller associations had of clocking good exports. A meeting co-chaired by joint secretary (sugar) and joint secretary at the Ministry of Commerce and industry is scheduled for Friday to address the shortage of containers and other issues related to export of sugar with industry associations and port authorities.

The government has fixed the target of exporting 60 lakh tonne of sugar so that liquidity position of sugar mills can be maintained and cane arrears of farmers do not get accumulated. In a note to the stakeholders, the Department of Food & Public Distribution mentioned that several representations have been received from sugar associations saying sufficient numbers of containers are not available for export.

“India has exported around 70,000 tonne so far. The container shortage, however, is affecting exports,” Rahil Shaikh, managing director, ‎MEIR Commodities India, said. “Sri Lanka consumes around 60,000 tonne of sugar from India every month. But the freight costs have gone up from $250 per container to $1,000 between January 2020 and January 2021. Afghanistan consumes 60,000 tonne of sugar from India every month and freight costs for Afghanistan have gone up from $125 per container to $550 per container. There has been a sharp increase in freight rates and shipping is pretty tight at the moment,” Shaikh said.

According to the department, Iran was the largest buyer of sugar from India in the 2019-20 season. “…exports to Iran are financed out of proceeds of crude oil imported by India handled through Vostro accounts, but due to US sanctions on Iran’s energy sector, India has stopped importing oil, which has resulted in reduction in its rupee balance that Iran has with Indian banks,” a note said. It added that this is affecting exports and exporters are facing difficulty with payments for consignments to Iran, and a trade mechanism based on barter or some other arrangement is likely to be discussed in the meeting.

The department said the scheme of assistance, which is generally announced at the start of the sugar season, was delayed by three months, thus providing the industry only nine months for export of sugar. This gives a more pressing reason to facilitate export. As per the current berthing norms of ports, all other vessels (steel, logs, bulk, etc) gets priority whereas the bagged sugar is not accorded due priority, affecting smooth export, it was noted.

Prakash Naiknavare, MD, National Federation of Cooperative Sugar Factories, pointed out that the federation has flagged the issue with the ministry concerned.

The All-India Sugar Traders Association has pointed out that exports in January 2021 were merely about 2 lakh tonne and only 4 lakh tonne are expected in February. “If steps are not taken to ship out sugar in break bulk vessels in place of containers, India will be much behind the export target of 60 lakh tonne…”

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