Sugar mills have urged the Centre to fix the minimum ex-mill sugar price at ₹36 a kg to cover production cost.
The Indian Sugar Mills’ Association (ISMA) submitted a memorandum in this regard recently to the Department of Food and Public Distribution.
Industry sources said the average ex-mill price in Uttar Pradesh was ₹31.50 a kg and in Maharashtra, ₹29.70 a kg.
According to the association, crushing of cane for the next sugar season (October 2018-September 2019) would commence in October this year with production expected to be about 35 million tonnes.
The mills usually complete crushing of cane by April and they would have to pay a fair remunerative price of ₹97,000 crore to the farmers next season.
Focused steps are needed to increase ex-mill prices so that they are able to pay the farmers the cane cost. The Centre should give a push to exports and rise the domestic ex-mill price to ₹36 a kg.
On the export front, the government should announce its policy for the next sugar season in another two weeks so that export contracts can be finalised and sugar mills get orders to make raw sugar.
Raw sugar import
ISMA officials had visited several countries, with some delegations led by government officials, to learn about export opportunities. Refineries and importers in Bangladesh, Dubai, and China have shown interest to enter into long-term import contracts for raw sugar from October this year. However, exporters are unable to give commitments. These countries want the sugar at prices on a par with countries such as Brazil and Thailand.
At the current global prices, Indian sugar mills will have to bear a loss of almost ₹13 a kg. So, the association suggested fixing the minimum ex-mill sugar prices in the domestic market at ₹36 a kg. Further, it should permit export of 60 lakh to 70 lakh tonnes of raw sugar next season. According to Palani G. Periasamy, chairman, South India Sugar Mills Association, in Tamil Nadu, with lower capacity utilisation, the production cost was ₹39 a kg and the average ex-mill price ₹34 a kg.
