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Informist, Tuesday, Oct. 29, 2024

 

NEW DELHI – Indian Sugar and Bio-Energy Manufacturers Association has urged the government to raise the minimum selling price of sugar to INR 39.14 per kilogram for the ongoing sugar season ending September, the association said in a press release Tuesday. The current minimum selling price of the sweetener is INR 31 per kg, unchanged since 2019.

 

Citing rising production costs, the apex sugar body has also demanded a hike in the rates of ethanol made from sugarcane-based feedstocks in the upcoming ethanol year starting November. ISMA has asked for ethanol from sugarcane juice to be hiked by INR 7.53 to INR 73.14 per litre, B-heavy molasses hiked by INR 6.97 to INR 67.70 per litre, and C-heavy molaases hiked by INR 4.92 to INR 61.20 per litre. 

 

ISMA has asked for a formula-based increase in the minimum selling price of sugar and ethanol rates, the association said in the release. "ISMA has been requesting to revise the MSP (minimum selling price) to at least Rs 39.14 per kg, based on the same formula that was used for fixing the MSP in 2017-18 and 2018-19," ISMA President M. Prabhakar Rao said. 

 

As per ISMA, 85% of the industry revenue is from sugar sales. Sugar mills also sell by-products of sugar--molasses, ethanol, press-mud, and bagasse, among others. However, ISMA stresses that the ex-mill price of sugar must be sufficient to cover cane purchase costs and support financial viability. 

 

According to ISMA, the current average ex-mill prices of sugar at INR 36.5 per kg, is below the production cost of INR 41.66 per kg. Citing the rise in fair and remunerative prices of sugarcane, the sugar industry has been demanding a hike in the minimum selling price of sugar to cover the production cost. Since 2018-19, the government has increased the fair price of sugarcane to INR 340 per 100 kg from INR 275 per 100 kg. Sugar mills pay Centre-fixed prices to farmers upon cane purchases. 

 

"This adjustment (hike in minimum selling price of sugar) would ensure mills can remain financially viable and make timely payments to farmers, avoiding arrears that strain the rural economy," ISMA said. Mills must pay farmers within two weeks of cane purchases or invite penalties as arrears of land revenue.

 

"The increase of MSP (minimum selling price) 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," Rao said in the release. 

 

On inflation worries, Rao said the proposed minimum selling price of INR 39.14 per kg will only account for a 0.95% increase in sugar rates over the last 10 years. Further, more than 60% of sugar is consumed by beverages, confectionaries, and other food industries, which can absorb price increases, Rao added. 

 

According to ISMA, a consistent formula for ethanol pricing based on fair and remunerative prices of sugarcane helps mills to divert excess sugar to ethanol production and boost India's renewable energy production. It has also urged a consistent long-term policy for sugar exports. 

To offload the surplus sugar in the country, ISMA has asked the government to allow 2 million tonnes of sugar exports in 2024-25 (Oct-Sep). With an opening stock of 8.4 million tonnes, gross sugar production expected at 33.3 million tonnes, ISMA foresees excess stock of around 3.1-3.2 million tonnes, over and above the normative stock of 5.5 million tonnes.  End

 

Reported by Afra Abubacker

Edited by Manisha Baxla

 

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