Covid surge hits sugar demand

Consumer demand for sugar has been affected due to lockdown and curfew restrictions by various state governments amid surging covid cases, industry leaders said. Prakash Naiknavare, MD, National Federation of Cooperative Sugar Factories (NFCSF), said that sugar millers are facing the heat with lessened liquidity and inability to fulfil payment of sugarcane farmers, which is reported to be approximately over Rs 23,000 crore.

“The situation is speedily moving towards replication of the first lockdown of March 2020. Back then the lockdown of 100 days had slashed down sugar consumption by one million tonne. Bulk consuming industries viz. beverages, ice-cream, chocolates, biscuits, sweetmeats and sherbet are likely to cut down on their sugar purchases. Add to this the ban or restrictions on ceremonies and public functions would cut down sugar consumption,” he observed.

As a result of this natural disaster the Indian sugar sector is staring at another scary business loss leading to financial stress and mounting cane arrears, he said.

Praful Vithalani, president, All India Sugar Trade Association (AISTA), agreed and sad that sugar consumption is set to fall for a second straight year after restrictions imposed on restaurants and sweet shops in various states. Vithalani said that purchases by bulk buyers have been falling and the summer demand that usually improves from March to June has not kicked in yet.

Maharashtra, Rajasthan, Chhattisgarh, Delhi and Uttar Pradesh are among states that have imposed various curbs this month after steep hike in Covid-19 cases.

Mukesh Kuvediya, secretary general, Bombay Sugar Merchants Association (BSMA), said that consumer demand has remained muted because of Covid and lockdown restrictions. Barring household consumption, the industrial demand is very low due to the uncertainty in the lockdown situation in several states. Demand for ice-creams and beverages is low, he said.

Sugar prices are currently ruling at `3,070 to `3,100 per quintal for S-grade and `3,100 to `3,165 for M-grade, he said. Although the wedding season has begun, some states have now restricted the number of guests at weddings and other functions and this again has impacted consumer demand, he said.

However, this year, Indian Sugar Mills Association (ISMA) said the disruption in the sugar supply chain is expected to be minimal due to night curfew and lockdowns as this time restrictions are more organised and standard operating procedures are already in place.

It is too early to talk about the impact at this point as the lockdown is only for a week, Abhinash Verma, director general, ISMA said.

Sugar prices improved slightly in April and sugar millers managed to sell around 22.5 lakh tonne sugar in March this year as compared to 18.75 lakh tonne same time last year, which means demand is improving, he said.

Earlier the National Federation of Co-operative Sugar Factories had urged the Centre to extend the period for sale sugar quota for the month of April and declare a limited sugar quota for next month.

The Ccntral government had announced a record sugar quota of 22 lakh tonne in April. The April quota is 4 lakh tonne more than the average of 18 lakh tonne announced in last five years, Jayprakash Dandegaonkar, chairman of the federation, said.