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ISMA Proposes 26% Sugar MSP Increase As Industry Faces Declining Production

Updated: Nov 06, 2024 04:03:54pm
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ISMA Proposes 26% Sugar MSP Increase As Industry Faces Declining Production

New Delhi, Nov 6 (KNN) India's sugar production is projected to reach 33.3 million tonnes in 2024-25, marking a 2.24 per cent decrease from the previous year, according to the initial estimate by the Indian Sugar and Bioenergy Manufacturers' Association (ISMA).

The industry organisation is advocating for a significant adjustment to the minimum selling price (MSP) of sugar, proposing an increase from Rs 31 per kilogram to Rs 39.14 per kilogram, representing a 26.25 per cent rise after remaining unchanged for five years.

ISMA President M Prabhakar Rao highlighted multiple challenges facing the sector, including increased sugarcane costs due to higher fair and remunerative prices (FRP), export restrictions, and reduced ethanol diversion.

Current sugar prices have declined to Rs 34-36 per kilogram from Rs 37-38 during the same period last year, primarily due to excess inventory.

The industry's supply outlook indicates an opening stock of 8.479 million tonnes as of October 1, with total availability projected at 41.779 million tonnes including estimated production.

After accounting for domestic consumption of 29 million tonnes and ethanol diversion of 4 million tonnes, closing stocks are expected to be 8.779 million tonnes by September 30, 2025.

Maharashtra's drought-affected crop is the main contributor to the anticipated production decline of 770,000 tonnes.

Against this backdrop, ISMA has requested permission to export 2 million tonnes of sugar, citing sufficient domestic stocks.

Rao emphasised that such exports would help maintain mill liquidity and ensure timely farmer payments while supporting both domestic consumption and the Ethanol Blending Program (EBP).

The industry faces additional pressure from grain-based ethanol producers, with sugar-based ethanol's share in the EBP program declining significantly from 70-75 per cent two years ago to approximately 40 per cent in the 2024-25 supply year.

Industry associations have expressed concerns to the central government about potential delays in farmer payments without improved financial conditions, noting that ethanol prices from sugarcane have remained stagnant for two years.

(KNN Bureau)

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