LPG shortage hits sugar demand, impacting overall consumption: ISMA

LPG shortage has taken a toll on the sugar demand from restaurants and bulk consumers, impacting overall consumption, said Indian Sugar & Bio-energy Manufacturers Association's (ISMA) Director General, Deepak Ballani.

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"Definitely, this has resulted in less consumption of sugar, and this is evident from the kind of dispatches we are seeing by the mills. In spite of a moderate quota released by the Department of Food and Public Distribution (DFPD), the dispatch has been very nominal. We are very concerned by the reduced consumption of sugar," Ballani told ANI on the sidelines of ISMA SugarNXT in New Delhi. He said that lower availability of LPG has impacted institutional consumption, particularly from restaurants and bulk users, leading to a visible slowdown in sugar offtake.

Sluggish Exports

On exports, Ballani said shipments remain sluggish despite some recent improvement in global price parity. "There was no international parity in January and February, so not much export had happened. Almost 4 lakh tonnes were either contracted or dispatched. In the last 10 days, because of better international parity, there has been some demand, but physical exports are quite sluggish due to shipping and logistic issues," he said. He said that some quantity of the sweetener is going to countries such as Sri Lanka and East Africa, but having said that, ISMA is not expecting more than 7.5 to 8 lakh tonnes by September 30.

Concerns Over Sugar Surplus

Raising concerns over surplus, Ballani said lower diversion of sugar towards ethanol this year has resulted in higher output. "This year, while we wanted a higher diversion, we are doing a lower diversion, which is also resulting in more sugar being produced. If we have too much sugar in the country, it would result in domestic prices being subdued," he said.

He added that maintaining optimal stock levels remains critical. "The government normally ensures that we have a closing stock and opening stock for the next season, but more sugar than required is definitely going to cause some issues," he said.

Demand Forecast Lowered

On demand, Ballani said sugar consumption is expected to decline this season. "We were expecting consumption of around 28 million tonnes, but we don't see more than 27.5 million tonnes. Last year, the demand was around 28.1 million tonnes, so there is a drop of almost 600,000 tonnes," he said.

Ethanol Blending and Policy Concerns

Highlighting the role of the sector in energy security, he said the sugar industry continues to support ethanol blending. "The industry is diverting a lot of sugar towards ethanol. As highlighted by the Prime Minister earlier, 20 per cent ethanol blending has replaced almost 4.5 crore barrels of crude. This has saved significant foreign exchange and benefited farmers," he said.

Declining Share of Sugarcane-Based Ethanol

However, he expressed concern over the declining share of sugarcane-based ethanol. "This programme started with about 90 per cent allocation to sugar, and now it has come down to around 28 per cent, which is a very big concern. Sugarcane was the foundation of the ethanol blending programme," he said.

Ballani said the industry has invested nearly Rs 40,000 crore in ethanol capacities and has urged the government to increase allocation in the next season. "We have requested that allocation be enhanced so that we can divert around 400-450 crore litres towards ethanol," he said.

Call for MSP Revision

On pricing, he said the industry has sought a revision in the minimum selling price (MSP) of sugar. "We have requested the government to fix MSP at least at Rs 41 per kg, which is the cost of production," he said.

He added that the second cycle of ethanol tenders by oil marketing companies (OMCs) is awaited and is currently delayed due to court-related issues. (ANI)