The government will consider the demand for higher minimum sale prices (MSP) of sugar from mills in sync with the fair and remunerative price (FRP) of sugarcane paid to farmers, food secretary Sanjeev Chopra on Thursday said. “The government is aware of the demand.. we are hopeful of finding a solution which will address industry’s concerns of the industry and the consumers,” Chopra told FE.
For the last many years, the Indian Sugar Mills Association (Isma) has been urging the government to enhance MSP of sugar by the millers with the corresponding increase in FRP prices.
The government on Wednesday approved an 8% hike in FRP of sugarcane to be paid to farmers for the 2024-25 season (October-September) to Rs 340/a quintal. This is one of the steepest hikes in FRP in recent years. Last year, the government had hiked FRP for sugarcane by only 3%.
“The Commission for Agricultural Costs and Prices may also recommend the MSP of sugar which as per industry estimates will be about Rs 3,900/quintal based on FRP of Rs 340/quintal of sugarcane,” according to a statement by Isma. MSP has remained unchanged since 2018 at Rs 3100/quintal.
In June, 2018 the government had introduced the concept of MSP of sugar so that industry could get at least the minimum cost of production of sweetener so as to enable them to clear cane price dues of farmers.
Isma stated that increase in FRP will lead to an additional Rs. 10,000 crore payment to the 50 million cane farmers through the industry.
The approval by the Cabinet Committee on Economic Affairs (CCEA) on increase in FRP is subject to base sugar recovery of 10.25%.
The decision to hike FRP comes at a time when a group of farmers from Punjab are demanding legal guarantees for all the crops covered under minimum support price (MSP).
Last month, ISMA had stated that the country’s sugar production in the 2023-24 season is likely to be higher than its earlier projection of 32.5 MT while domestic consumption would be around 28.5 MT.
The sugar output for 2022-23 season was 36.61 MT, which excludes diversion towards ethanol production. Retail inflation for sugar was 7.51% in January, 2024.
Chopra said sugar mills will now be able to sell potash derived from molasses (PDM) to fertiliser companies for generating an additional revenue.
He said a price of Rs 4263/tonne of PDM has been fixed for sale by sugar mills to fertiliser companies.PDM manufacturers can claim subsidy of Rs 345/tonne at present rate under nutrient based subsidy scheme from fertiliser ministry, according to a statement. Meanwhile, the stock prices of some of the major sugar companies declined marginally on Thursday on the government’s decision to hike FRP of sugarcane.
The stock prices of Mawana Sugar declined by 2.5% on Thursday to Rs 102.07 against Rs 104.64 on Wednesday. Similarly, the shares of Shree Renuka Sugar, Triveni Engineering and Industries and Dhampur sugar mills declined by 1.5%, 0.7% and 0.6% respectively compared to Wednesday’s prices.