After Rice And Onion, Govt Likely To Ban Sugar Exports: Report

Global food prices are already nearing multi-year highs and any more push could trigger further inflation in the global food markets.

After rice and onion, India might be looking at banning sugar exports in the upcoming season beginning in October, government sources have claimed. The export ban, if implemented, will be the first in the last seven years.

According to a Reuters report, the government is planning to place a ban on mills from exporting sugar due to a lack of rainfall which has impacted output majorly, three sources from the government stated. 

This ban could potentially lead to an increase in benchmark prices in New York and London. Notably, global prices are already nearing multi-year highs and any more push could trigger further inflation in the global food markets, the report noted. 

An anonymous government source stated, “Our primary focus is to fulfill local sugar requirements and produce ethanol from surplus sugarcane. For the upcoming season, we will not have enough sugar to allocate for export quotas,” as quoted by Reuters. 

India’s sugar mills sold a record 11.1 million tonne of sugar in the last season and about 6.1 million tonne of sugar in the current season, ending September. Last time, India levied a 20 per cent tax on sugar imports in 2016 to control overseas sales. 

The sugarcane-producing regions in Maharashtra and Karnataka have witnessed almost 50 per cent below average rainfall in the monsoon season so far. These regions account for more than half of the country’s total sugar production.

Another anonymous industry official noted, “Patchy rains would cut sugar output in the 2023-24 season and even reduce planting for the 2024-25 season,” as quoted in the report. Notably, the country’s sugar production is expected to fall 3.3 per cent to 31.7 million tonne in the 2023-24 season. 

Sugar prices at the domestic level reached their highest in almost two years, pushing the government to allow mills to sell an additional 200,000 tonne of sugar in August, the report noted. 

The report stated citing another government source, “Food inflation is a concern. The recent increase in sugar prices eliminates any possibility of exports.” India saw it’s retail inflation increase to a 15-month high of 7.44 per cent in July, while the food inflation touched 11.5 per cent last month, highest in more than three years. 

Last month, India imposed a ban on exporting non-basmati white rice, and last week itself, the government levied a 40 per cent export duty on onions to control food prices at the domestic level.