Sugar mills are lobbying for the government to hike the minimum selling price (MSP) of sugar to ₹34.50 per kg to help them clear payment arrears to cane farmers. The production rose 20% in the first five months of the season which started in September, putting further pressure on falling prices, said the Indian Sugar Mills Association on Wednesday.
This comes at a time when large numbers of sugarcane farmers from western Uttar Pradesh, one of the country’s biggest sugar producing areas, are camped on the borders of Delhi as part of the protest against three farm reform laws.
By the end of February, 502 mills across the country had produced almost 234 lakh tonnes of sugar, in comparison to 195 lakh tonnes produced by 453 mills during the same period last year. Production has shot up in Maharashtra and Karnataka, though it is slightly lower in Uttar Pradesh than last year, according to ISMA data.
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“The prices are almost ₹80-100 per quintal less than what was prevailing a year back during the corresponding period,” said ISMA. “This is not a good sign as low prices, much below the cost of production for the last several months, have adversely affected the liquidity of mills and their ability to pay the FRP [ie Fair and Remunerative Price] to cane farmers. It is feared that if such a situation persists then cane price arrears will jump very fast to uncomfortable levels.”
The industry body urged the Centre to hike the MSP from ₹31 per kg to ₹34.50 per kg. It pointed out that the FRP, a benchmark rate below which mills are not allowed to buy cane, has already been hiked by ₹10 per quintal this year. “There is a need to quickly decide on increasing the MSP of sugar to ensure that sugar mills are able to pay farmers on time,” said ISMA.