While awaiting their export quota, these mills are getting in touch with producers in Maharashtra to buy sugar there and ship it right across the ports. Though the central government has permitted exports of 5 lakh tonne, it has not released a formal notification yet.
The January 2011 notification had given two options to factories: They could either export sugar from their own production or source it from some other factory to minimise the transportation cost. If the January 2011 provisions continue, Uttar Pradesh mills are most likely to purchase sugar from Maharashtra. The state is the lowest-cost sugar producer in the country and the country’s main port, JNPT, is closer to its mills. Sources said a top private sugar manufacturer has blocked export licences of Uttar Pradesh mills for export of 27,000 tonne sugar.
“Some top Uttar Pradesh mills have already begun enquiries with mills in Maharashtra,” said BB Thombre, chairman of Natural Sugars, adding, “There will have to be a pooling of export quota of smaller mills as some mills have quota of just a few hundred tonne.” Abinash Verma, director general of Indian Sugar Mills Association, an industry association of private sugar mills, said, “Mills are desperate to improve their cash flows through exports as they have mounting cane arrears.”
In Maharashtra, larger cooperative mills pool together the quota of smaller ones because international export shipments quantities are for bulk volumes such as 10,000 tonne to 20,000 tonne. The smaller mills usually have allocations of a few hundred tonnes and they cannot export individually.
Some leading sugar cooperative mills involved in exports have confirmed that they have started getting calls from the smaller mills for the purchase of their export quota. Interestingly, Tamil Nadu mills have the option of exporting smaller quotas to the neighbouring Sri Lanka. N Ramanathan, MD of Erode-based Ponni Sugars, said, “Most of the mills from Tamil Nadu will export sugar to Sri Lanka, the nearest market and the East Asian countries. Individual mills can export smaller quantities to Sri Lanka because they can be sent even by small boats.”
Union agriculture minister Sharad Pawar has said that keeping out trading houses was a deliberate decision so that exports benefit mills across the country. Though there is no clarity on the participation of export houses , a leading export house confirmed that it would be going to seek allocations.