India likely to raise sugar MSP 10% to Rs 32/kg

The Centre is likely to revise the sugar minimum selling price (MSP) by 10 per cent from its current level of Rs 29 a quintal to Rs 32 a quintal in the weeks ahead.

Last year, the Union food ministry had fixed the ex-factory sugar sale price at Rs 29 a quintal to help domestic sugar mills amid falling retail sugar prices and the export-market squeeze owing to a global glut in the sector.

However, following a build-up of sugarcane outstanding and the start of the fresh crushing season 2018-19, the industry had been demanding a higher sugar sale price of around Rs 35 a quintal to improve margins and for speedier settlement of arrears.

In June 2018, the Centre had announced a Rs 7,000 crore package to ease liquidity in the sugar sector, while fixing MSP of white (refined) sugar at Rs 29 a kg. Besides, the Cabinet Committee on Economic Affairs (CCEA) announced the creation of buffer stock of 3 million tonnes of sugar .

The sugar companies will have to make sure they do not demand any further subsidy from the Centre once the MSP hike has been announce

In Uttar Pradesh, the country’s top sugar producer, the Yogi Adityanath government had also announced a soft loan package of Rs 4,000 crore to help the private sugar millers payoff farmers. The state had announced other benefits as well to ease the payments positions.

The global sugar market sentiments continue to be muted with the sugar futures indices bidding goodbye to 2018 calendar at decade low levels owing to supply glut, perpetuated primarily by the top two suppliers India and Brazil.

However, China, which has a big raw sugar import market of 4-5 million tonnes, was also expected to announce its current season quota in the next few weeks, which would ease the situation. Indian sugar is exported to Bangladesh, Sri Lanka and the African countries.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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