Agriculture Industry

India preferred sugar supplier for parts of Asia, East Africa

24 March 2022, New Delhi: As rising crude oil prices drive up freight rates, India is seen emerging as a preferred supplier of sugar over Brazil for consuming markets in West Asia, Eastern Africa and South Asia. 

The geographical proximity is seen pushing buyers in these regions to source the commodity from India and the latest developments on the trade front could push the shipments to over 80 lakh tonnes (lt) in the current year 2021-22. 

Edge over Brazil

In mid-March, the Indian Sugar Mills Association, the apex trade body, had revised its export estimates to 75 lt — up from the earlier 60 lt. 

However, with crude prices seeing a sharp increase in recent weeks due to the Ukraine-Russia conflict, resulting in higher freight costs, Indian exporters, supported by higher domestic output, are seen having an edge over their Brazilian counterparts. “Due to the rise in freight rates, the world is looking for Indian sugar. Importers in the Middle East, East Africa and South-East Asia are seen preferring the Indian sugar over Brazilian supplies,” said Abinash Verma, Director-General, ISMA. 

The trend is reflected in the rise in export contracts in the recent weeks. 

Contracts for over 15 lt have been concluded over the past 20 days, Verma said. 

India had exported a record 71 lakh tonnes in sugar season 2020-21. At the recently held sugar conference in Dubai, some international trade houses were of the view that Indian sugar exports could be in the range of 80-85 lt , sources said. 

Abhijit Ghorpade of Ghorpade Agrovet in Kolhapur, a broker, said of late there is a tremendous buying interest from multinational companies. Besides the freight cost advantage, the higher diversion of cane in Brazil for ethanol will also support the overseas demand for Indian sugar, he said.

Hike in exports

In the current sugar season, exports during October-February stood at 47 lt — an increase of 165 per cent over 17.75 lt in the same period a year ago.

Over the past decade, exports of the sweetener have increased from 17.3 lt in 2010-11 to 71 lt in 2020-21. 

Indonesia, China, Bangladesh, Malaysia, South Korea and the UAE among others have been major buyers of Indian sugar. Sugar output in the current season is estimated to be 333 lt (312 lt).