Govt To Consider Higher MSP For Sugar To Benefit The Industry

On Wednesday, the government approved an 8% hike in the fair and remunerative price (FRP) of sugarcane, increasing it to ₹340 per quintal from the current price of ₹315 per quintal. According to Food Secretary Sanjiv Chopra, the government is further considering the demand for higher minimum sale prices (MSP) for sugar.  

“The government is aware of the demand. We are hopeful of finding a solution that will address the industry’s concerns and those of consumers,” Chopra said on Thursday. For the past few years, the Indian Sugar Mills Association (ISMA) has been asking the government to raise the MSP of sugar by the millers in relation to the increase in FRP prices. 

The increase in the FRP of sugarcane will be paid to farmers for the upcoming sugar season, commencing on October 1, 2024. As per the official government data, this is one of the steepest rises in FRP in the past few years. In 2023–24, the hike in the FRP for sugarcane was only 3%. 

“The Commission for Agricultural Costs and Prices may also recommend the MSP of sugar, which, as per industry estimates, will be about Rs 3,900/quintal based on the FRP of Rs 340/quintal of sugarcane,” ISMA said in a statement. It has remained the same since 2018 at ₹ 3100 per quintal. 

In June 2018, the central government came up with the concept of MSP for sugar to provide the industry with at least the minimum cost of sweetener production and enable them to clear out the price dues of sugarcane farmers. ISMA stated that an increase in the FRP of sugarcane will result in an additional ₹10,000 crore being paid to 50 million cane farmers through the industry. 

The Cabinet Committee on Economic Affairs (CCEA) approved this increase in the FRP based on the condition of achieving a base sugar recovery of 10.25%. Last month, ISMA reported that India’s sugar production in the 2023–24 season is believed to be exceeding its earlier projection of 32.5 million metric tonnes, while domestic consumption would be around 28.5 million metric tonnes. 

The sugar output for the 2022–23 season was 36.61 million metric tonnes, excluding the diversion towards ethanol production. While the retail inflation of the sweetener was 7.51% in January 2024, Food Secretary Chopra said that the sugar mills will now be able to sell potash prepared from molasses (PDM) to fertilizer companies, which will help generate additional revenue. 

He further stated that the PDM price has been set to ₹4263 per tonne for sale to fertiliser companies by sugar mills and the manufacturers can get a subsidy of ₹345 per tonne at the present rate of PDM under the nutrient-based subsidy scheme from the Department of Fertilisers.