World’s largest sugar producer India to make a call on export ban amid global food price crisis

A labourer carries a sack of sugar at a warehouse in Jammu, India (AP)
A labourer carries a sack of sugar at a warehouse in Jammu, India (AP)

As speculation swirls around the possibility of India imposing a ban on sugar exports for the first time in seven years, the Indian Sugar Mills Association (ISMA) has denied an immediate ban was on the cards but added that a decision could be taken in the next few weeks.

A potential decision to ban sugar exports by the world’s second-largest exporter of the commodity could have significant global repercussions amid already increased prices internationally, with fears triggering of further inflation on global food markets.

A recent report by Reuters, quoting three government sources, said the south Asian country was expected to ban mills from exporting sugar in the next season beginning in October due to reduced cane yields this year caused by lack of rains.

“Our primary focus is to fulfil local sugar requirements and produce ethanol from surplus sugarcane,” an unnamed government source told the news agency.

“For the upcoming season, we will not have enough sugar to allocate for export quotas.”

Indian government sources, however, told news channel CNBCTV18 that a decision is yet to be taken.

The outlet quoted a source as saying that decisions regarding the sugar export policy for the 2023-24 period would be taken “at an appropriate time based on available estimates of sugarcane and the sugar season”.

“While it’s tempting to speculate on exports at this stage, we will approach the government in September/October, depending on the crop situation and the availability of sugar surplus,” ISMA stated, according to the outlet.

Aditya Jhunjhunwala, president of ISMA, also told The Economic Times newspaper that there is no official intimation from the government on any potential sugar export ban yet. However, he added that the government and the industry will be “looking at the final numbers of the crop” and “we will know that only after middle of October or maybe end of September”.

Concerns are already rising even before a decision is reached as the absence of India, a major player in the global sugar market, could potentially drive benchmark prices in New York and London.

In the ongoing season, Indian sugar mills were permitted to export a modest 6.1 million tonnes until 30 September, a significant reduction from the record-breaking 11.1 million tonnes allowed in the preceding season, according to Reuters.

This decision came after India’s top cane-growing districts saw half the average amount of rain this year and its sugar production could fall as much as 3.3 per cent – to 31.7 million tons – for the season starting October.

This comes after the country also limited its exports of non-basmati white rice in a move that took about a fifth of international rice stocks off the market.

The International Monetary Fund has raised concerns over India’s rice export ban, saying it could have the same global impact as the suspension of Black Sea grain deal. Last year, India’s move to ban wheat exports led to a global outcry.

The Indian government has been trying to stabilise domestic prices of key crops as the south Asian nation suffers through repeated wraths of the climate crisis – heatwaves, droughts and erratic rainfall have all impacted crop production this year.

Prices of some home staples have skyrocketed in recent days, particularly of tomatoes, leading to shortages, robberies and even consumers travelling to neighbouring Nepal to find supplies.