Sugar co-ops meet Shah, seek higher MSP

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Updated: August 04, 2021 12:20 AM

“The current average production cost of sugar is Rs 36 per kg. The recommendation of revenue sharing formula by the committee headed by Dr C Rangarajan has been accepted by the Centre, according to which if 70% and 75% of revenue is to be paid as cane price, the sugar MSP logically cannot be below Rs 37.50 per kg,” he said.

The federation has also sought higher selling prices for ethanol produced from unsold sugar.The federation has also sought higher selling prices for ethanol produced from unsold sugar.

Representatives of the National Federation of Cooperative Sugar Factories (NFCSF) met Amit Shah, Union Minister of Cooperation, on Tuesday to seek a higher minimum support price (MSP) for sugar. In their representation, federation chairman Jayprakash Dandegaonkar said sugar MSP should invariably be linked with sugarcane fair and remunerative price (FRP).

“The current average production cost of sugar is Rs 36 per kg. The recommendation of revenue sharing formula by the committee headed by Dr C Rangarajan has been accepted by the Centre, according to which if 70% and 75% of revenue is to be paid as cane price, the sugar MSP logically cannot be below Rs 37.50 per kg,” he said.

In 2019, the MSP was raised from Rs 29 per kg to Rs 31 per kg in line with upward revision in FRP. But for the last two-and-a-half years, MSP has not been revised despite rise in FRP, he pointed out. Declaring uniform MSP for all grades of sugar has totally disturbed the market and hence, differential grade-wise pricing is requested to remove the current anomaly, Dandegaonkar said.

There is a market premium of Rs 1.5 / kg for bigger grain sugar. The upward revision in MSP will immediately raise the valuation of sugar stock in godowns, helping cash liquidity of ailing sugar mills, which will help them clear sugarcane arrears of farmers, he said.

The federation also pointed out that the Tripartite Agreement [TPA] among ethanol suppliers, OMC’s and banks has not been beneficial for cooperative sugar distilleries due to their unhealthy balance sheets. As a result, only 88 out of 422 proposals have been funded by banks in which share of cooperatives is negligible.

The federation has suggested establishing an independent ‘Ethanol Manufacturing Unit’ on the premises of present cooperative sugar mills so that banks may enter into a tripartite agreement with these independent business units (BU), based on their future estimated revenue on supplying committed ethanol to OMC’s who can release payments. The federation has also sought higher selling prices for ethanol produced from unsold sugar.

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