Saturday, March 29, 2008

A Sugar Candy that you Cannot Eat

The European Union has now decided to open its markets to exports of refined sugar from developing nations including India. This is an oppurtunity that we could make good use of, if we can get geared up to face the challenge before the markets open in 2009.

India currently exports a paltry 0.33 percent of the 27 million tonnes of Indian refined sugar to the EU. If we are to benefit from the EU opening up, we need to increase that percentage! Currently India has manufacturing capabilites to make sugar of ICUMSA 200 to ICUMSA 100 standards. (ICUMSA is a standard of sugar purity measured through the brightness of sugar. read the standards at What does ICUMSA mean?)

In my opinion, 4 things India should work on in 2008 .

1.EU consumes sugar of ICUMSA 45 and below, mainly made from beet. Indian Sugar mills dont yet have the infrastrucutre to manufacture this grade of sugar. This needs to be developed with immediate effect.

2. India should start increasing its percentage of exports in the EU to Chemical and other non-food processing industries which accept white Indian refined sugars. The EU opening up will directly mean a business oppurtunity for India in this segment.

3. Sugar Mills of India are heavily unproductive compared to thier European Counterparts. Its high time for a sugar revolution in India, and we need to set higher standards of productivity in our Sugar producing units.

4. Government should include a more flexible regulation as far as the price of cane is concerned. As of now , the central and the state governments fix the price of cane, and the farmer gets the same amount of returns irrespective of demand or volume of sugar exported. The mills now, have to (by law) consume all the cane produced by the farmers in their territory at a price fixed by the government. If mill owners have to be more profitable after the EU opens ,cost of sugar should also be allowed to vary based on export demand.

These measures and more will be essential to take advantage of the EU markets opening up!! Else with the situation that it is right now, this gift may very well be a sugar candy that you cannot eat!!

1 comment:

Sita said...

There is a huge potential for sugar manufacturers and sugarcane farmers. We should make use of it well.

As you said, its time for us to gear up to meet this market potential available. If we approach correctly, this requirement of the EU will serve as a boon to us!!!!