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HomeIndustry & Updates‘Ethanol blending programme will cut down surplus sugar stock substantially’

‘Ethanol blending programme will cut down surplus sugar stock substantially’

India’s surplus sugar stock is likely to come down substantially to less than a million tonne (mt) in next four years from a high of 5.2 mt last year — thanks to the success of the ethanol blending programme with industries diverting sugarcane for direct conversion to the bio-fuel.

Participating at the Commodities Market Outlook 2022 event organised by BusinessLine on Thursday, Ravi Gupta, Director, Shree Renuka Sugars, said India will continue to be a net exporter until 2023-24 (October-September) though the volume may drop to 0.5 mt.

On the other hand, the sugar (equivalent sugarcane) diverted to manufacture ethanol is seen increasing to 5.2 mt in 2023-24 from 2.1 mt in 2020-21, Gupta said.

On the current season’s sugar balance sheet, he said exports are set to fall to 6 mt from 7.2 mt last year and production to 30.5 mt from 31.2 mt. Domestic consumption may inch up to 26.5 mt (26 mt), he said.

Exporters turn cautious

Commenting on the global scenario, Gupta said importing countries would have to look to India to source sugar as there was global deficit, which is seen to continue going forward. Indian exporters are reported to have already contracted about 3.3 mt for shipments since the beginning of current season.

However, exporters have adopted a “wait and watch” policy to enter into new export contracts as prices in the global markets have dropped below the multi-year highs witnessed till October.

“Indian mills are not in a hurry to sell sugar as previous sales are yet to be executed. Also, they do not like the current global prices, which shall have to move up to attract more Indian sales,” All-India Sugar Traders Association (AISTA) Chairman Praful Vithalani told Business Line last week. According to AISTA, 0.94 mt have already been shipped with raw sugar making up 0.47 mt.

Cane arrears reduced

Gupta said the sugar market will follow crude prices which is normal in sugar deficit year when production falls below consumption as ethanol and crude oil “go hand-in-hand”.

“Ethanol played independently of crude when there was global sugar surplus in 2018 and 2019,” he said.

On the domestic ethanol scenario, Shree Renuka’s director said it was the biggest factor in reducing sugarcane arrears as almost entire amount (of 2020-21) have been paid, except in few cases where mills are in financial stress.

The government last week informed Parliament that only ₹4,445 crore, which is 4.8 per cent of total amount of ₹92,881 crore, is due during 2020-21 season. The arrears in the past five years are less than 2 per cent of the total dues.

Amid a rising demand to help farmers diversify from water-guzzling crops such as sugarcane and also the recent government decision to allow ethanol production out of foodgrains, Gupta said both systems (sugar-based and grain-based plants) will coexist as the government targets 20 per cent blending of ethanol with petrol by 2025-26 for which the requirement will be about 10 billion litres.

Both sugar-based and grain-based plants will contribute equally to achieve this targetted output, he said.

The above news was originally posted on www.thehindubusinessline.com

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