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MSME sugar producers struggle with lower margins

Updated: Dec 29, 2022 07:47:55am

MSME sugar producers struggle with lower margins

New Delhi, Dec 29 (KNN) The micro, small, and medium enterprises (MSMEs) in the sugar industry are majorly impacted by the major global and domestic events and as a result their margins are hit by flat product prices.

Despite the increase in prices of sugarcane which is the key raw material, there has been no equivalent increase in the price of sugar, as per Business Standard’s CRISIL SME Tracker.


Dominating the sugar industry, MSME segment only has standalone sugar mills and will face lower margins compared with non-SME counterparts, which have integrated mills, including power and distillery units, said the report.

Owing to the likely revival of both major producers, Brazil and Thailand the global supply is to ease.

Domestic sugar producers saw 14 per cent revenue growth in FY22, as a decrease in output from these countries after the sugar season (October-September) boosted demand for Indian produce and lifted its prices in world markets.

On domestic front, export momentum continued in the first half of FY23. However, the government imposed a cap on exports at 11.2 million tonnes (MT) for the 2022 sugar season.

For the current season (2023), the government has increased the fair and remunerative price for sugarcane by 5 per cent to Rs 305 per quintal for a recovery rate of 10.25 per cent.

Due to reduced domestic inventory the cap for the current season has been set at 6 MT for exports.

Since it will still be adequate for domestic consumption, we expect an increase in the export cap to 8.5 MT by the end of the first half of this sugar season, said the report.  (KNN Bureau)


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