Sugar industry demands hike in price to help cut losses

Sugar industry body ISMA has demanded that the minimum selling price (MSP) of the sweetener should be increased to Rs 39.14 per kg from the current Rs 31 per kg as millers are facing losses due to high production cost.

In a statement on Tuesday, the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) called for an increase in the Minimum Sale Price (MSP) of sugar, which has remained unchanged at Rs 31 per kg since February 2019.

During this period, it said the Fair and Remunerative Price (FRP) of sugarcane has increased five times, with the FRP now standing at Rs 340 per quintal for the 202425 sugar season.

Under the Sugar Price (Control) Order of 2018, MSP determination should account for FRP levels, but the current MSP fails to reflect these rising costs.

"As sugar contributes over 85 per cent of the industry's revenue, ISMA stresses that the ex-mill price of sugar must be sufficient to cover cane purchase costs and support financial viability," it said.

Present ex-mill sugar prices average Rs 36.5 per kg, which falls below the calculated production cost of Rs. 41.66 per kg.

To address this, ISMA has advocated for an MSP of Rs 39.14 per kg.

"This adjustment would ensure mills can remain financially viable and make timely payments to farmers, avoiding arrears that strain the rural economy," ISMA said.

The association said the increase would have minimal impact on consumers, as over 60 per cent of sugar is used by industries capable of absorbing the cost.

ISMA President M Prabhakar Rao, said, "We need urgent support from the Government to increase the MSP of sugar to reduce losses being faced by the industry."

The increase of MSP will protect the minimum ex-factory price particularly during the crushing season during which the prices tend to go below the cost of production, bleeding the mills and making them financially unviable, he added.