Sugar sector demands hike in sale price and ethanol prices

ISMA urges government to increase sugar MSP, ethanol prices, and permit exports to address industry losses and surplus stock.

The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) has urged the government to increase the minimum sale price of sugar and ethanol and permit sugar exports.

The Minimum Sale Price (MSP) of sugar should be increased to ₹39.14 a kg for the sugar season 2024-2025 from ₹31 a kg that was fixed in 2019, ethanol procurement prices should be raised to ₹ 73.14 per litre (Sugarcane), ₹67.70 per litre (B-heavy Molasses), ₹ 61.20 per litre (C-heavy molasses) and export of 20 lakh tonnes of sugar should be permitted as there is an excess stock of 31.21 lakh tonnes to 32.21 lakh tonnes, the ISMA said.

M. Prabhakar Rao, president of the Association, said in a statement, “We need urgent support from the government to increase the MSP of sugar to reduce losses being faced by the industry...As such, more than 60% of the sugar is consumed by the beverages, confectionary and other food industries, who are capable of absorbing these prices.”

Present ex-mill sugar prices average ₹36.5 a kg, which falls below the calculated production cost of ₹41.66. Sugar contributes to over 85% of the industry’s revenue and the ex-mill price of sugar must be sufficient to cover cane purchase costs.

According to Deepak Ballani, Director General of ISMA, urgent policy action is imperative for the sugar sector’s stability as production costs are up, ethanol procurement prices are stagnant and the industry expects surplus sugar production.

Establishing a consistent formula for ethanol pricing based on FRP will encourage sugar mills to redirect surplus sugarcane to ethanol production. A long-term export policy will enable effective management of anticipated surpluses, he said.

With an opening stock of 84.21 lakh tonnes and gross production expected to be 333 lakh tonnes, the Association said it estimates the excess stock to be almost 32 lakh tonnes.