India’s sugar industry urges government to hike minimum support price

India’s sugar industry has urged the government to raise the minimum price of sugar to Rs 34.50 per kilogram, highlighting that mills are required to buy sugarcane from farmers irrespective of whether there is surplus inventory or not. 

“This is even when there is surplus sugar inventory, which the mills are unable to sell even in 16-18 months from the date of production, ” the Indian Sugar Mills Association (ISMA) wrote in a letter.

It said the government had in June 2018 decided that a price for sugar would be fixed to cover the cost of production based on the minimum price for sugarcane that mills have to pay farmers. This was kept at Rs 29/kilogram at that time.

Since then, even though the cost of production had gone up and the minimum price for cane that mills have to pay farmers has increased, there has been no increase in the minimum support price in the last 18 months from Rs 31/kilogram, ISMA said.

The industry body said that prices have remained unchanged despite a recommendation from the government think tank Niti Aayog.

ISMA said that the “mismatch between sugarcane price and price of sugar is making their business unviable. It said the additional price will provide working capital to mills to pay sugarcane farmers for their produce.

India is the world’s second-largest sugar producer after Brazil. The industry has started supplying for ethanol blending programs with gasoline, but the off-take is small compared to consumption of sugar.

The industry body said that it will take time to divert surplus sugar into ethanol in sufficient quantity and therefore requested the government to urgently come out with export allocations for the new marketing year that began October 1.

“There are a lot of enquries from countries like Malaysia, Indonesia, Bangladesh, Sri Lanka and Middle Eastern countries, East African countries. But since the export policy for 2020-21 has not been announced, we are unable to sign contracts,” the industry body added.

It added that October-April is an opportune time for India to export sugar as Brazil does not produce the sweetener during the period.

The industry body also urged the government for release of subsidies that will be handed out to sugarcane farmers.

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