The Indian Sugar Mill Association (ISMA) objects the Central Government’s claim that its assistance to the industry through various schemes, including the ethanol program, is assisting the industry in compensating for lower sugar price realization.
ISMA raised objections in a letter to the Prime Minister’s office to a statement by the Minister for Consumer Affairs, Food, and Public Distribution that because the government is helping the sugar industry via multiple other schemes, there may be no immediate need to raise the minimum selling price (MSP).
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In the letter, ISMA President Niraj Shirgaokar said, ‘It is extremely important to note that about 80% (or even more in some cases) of a sugar mill or company’s total revenue comes only from sugar and that by-products like power, ethanol, and so on contribute 15-20% of overall revenue. As a result, the belief that the government’s aid in other areas, including ethanol, is sufficient to compensate for lower sugar price realization is incorrect.’
FRP will rise
The Cabinet Committee on Economic Affairs authorized the Fair and Remunerative Price (FRP) of sugarcane for the sugar season 2021-22 (October – September) at 290/- per quintal for a basic recovery rate of 10 percent last month.
Ex-mill prices, which have been hovering around ₹31-32 per kg from October 2020 to July 2021, increased slightly in August 2021 and are now around ₹35 per kg (because of the festival season).
ISMA stated that if the MSP of sugar is raised to ₹34-35 per kg as a result of the increase in the FRP of sugarcane, there should be no impact on food or general inflation as a result of the increase in MSP of sugar. This is because the MSP for sugar demanded by the industry and various institutions and governing bodies is lower than the country’s current ex-mill prices.
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‘We sincerely hope and pray that you will take an immediate decision to raise the MSP of sugar to ₹35 per kg, thereby saving sugar mills from the problem of liquidity shortage and the resulting problem of high cane price arrears in the coming season,’ Shirgaokar said.