INDUSTRY body ISMA has urged the Food Ministry to increase the minimum selling price (MSP) of sugar to Rs 36-37 per kg from the current Rs 31 per kg, citing rise in production cost.

In a letter to Food Secretary, Indian Sugar Mills Association (ISMA) President Aditya Jhunjunwala said the sugar MSP is important for mills to pay the fair and remunerative price (FRP) fixed by the Centre. The FRP is the minimum price that mills have to pay to sugarcane farmers for the purchase of cane. At present, ISMA said that the average all India ex-mill prices are around Rs 33-34 per kg, while ex-mill prices in major sugar producing states like Maharashtra and Karnataka are further lower at around Rs 32-22 per kg.

“Current ex-mill prices are much lower than the cost of production of around Rs 36-37 per kg at current FRP. We request the MSP of sugar may be increased to around Rs 36-37 per kg by linking MSP of sugar with the FRP of sugarcane,” Jhunjhunwala said.

ISMA noted that around 85 per cent of revenue comes from the sale of sugar and hence it is important for mills to be able to pay the FRP to cane farmers. The association highlighted that the Centre has been fixing the MSP of sugar since June 2018, which was revised to Rs 31 per kg in February 2019 when the FRP of sugarcane was Rs 275 per quintal. The FRP of sugarcane has been increased twice since then by cumulative Rs 15 per kg, but the MSP has not been raised, it pointed out. For 2021-22, the FRP is Rs 290 per quintal. That apart, the ISMA President said that the costs incurred on account of interest on term loans, depreciation of plant and machinery and other raw materials have increased significantly.

ISMA recently said that the India’s sugar production could fall slightly to 355 lakh tonnes in the 2022-23 marketing year starting October, due to diversion of sugarcane towards ethanol manufacturing. As per the ISMA, the sugar production is estimated at 360 lakh tonnes in the current marketing year ending September. Before considering diversion towards ethanol, net sugar production is estimated to be higher at 399.97 lakh tonnes in 2022-23.