Industry body ISMA has demanded an increase in the minimum selling price of sugar to Rs 34.5-35 per kg from the current Rs 31 per kg to boost the liquidity of the millers, while accepting that the Rs 5 per quintal hike in the fair and remunerative price (FRP) of sugarcane will not overburden millers.
As reported yesterday, the government had announced to increase the sugarcane FRP by Rs 5 per quintal to Rs 290 per quintal to boost the income of about 5 crore cane growers.
In a statement, Indian Sugar Mills Association (ISMA) said “The current decision to increase the FRP for 2021-22 by 1.75 per cent seems quite reasonable. It is not a major increase, as compared to the past when the government had in a couple of years increased cane FRP by Rs 25 to Rs 40/quintal of the cane.”
The industry expects that the government would also increase the minimum selling price (MSP) of sugar to help millers accommodate the higher cane price payment to farmers in the current as also the next season. “MSP of sugar has remained static for over 30 months, even though the cane FRP was increased by Rs 10/quintal in 2020-21,” the statement said.
The association further said the all-India average ex-mill sugar price is prevailing currently at around Rs 35/kg, and therefore, the increase in sugar MSP to Rs 34.50-35/kg will not have any impact on the sugar price and certainly not lead to any inflation.
The government, however is not too keen in increasing the MSP for sugar. “…We do not see any reason at the present moment for increasing the (sugar) selling price,” Minister Piyush Goyal he said, adding that sugar prices have remained stable in the domestic market. He also said the government has ensured a “delicate balance” between the interest of farmers and consumers as well as of the industry. Goyal also emphasized that the government is encouraging sugar mills to divert excess sugarcane to ethanol which is blended with petrol, with the percentage of ethanol blended in petrol expected to go beyond 20 percent from the current 7.5-8 percent levels, over the next two-three years.