Indian Sugar Industry Urges Govt For Ethanol Procurement Price Hike

New Delhi, May 22 (KNN) The Indian sugar industry is pressing the government to increase ethanol procurement prices, aligning them with the recent hike in the Fair and Remunerative Price (FRP) for sugarcane. 

This appeal comes amidst a significant downturn in sugar production and escalating financial challenges faced by sugar mills.

In the 2024-25 crushing season, India's sugar output plummeted by over 55 lakh metric tonnes (LMT), dropping from 315.40 LMT in the previous year to 257.40 LMT. 

Maharashtra and Karnataka experienced the steepest declines, attributed to erratic rainfall and red rot disease, which also led to a decrease in sugar recovery rates from 10.10 per cent to 9.30 per cent.Consequently, 532 out of 534 sugar mills ceased operations by mid-May. 

The National Federation of Cooperative Sugar Factories (NFCSF) has highlighted that stagnant ethanol prices have made sugar production more economically viable than ethanol production, resulting in a shortfall in the targeted ethanol diversion. 

To address this, the NFCSF is advocating for an increase in ethanol procurement rates and the establishment of a linkage between FRP and ethanol prices. 

Deepak Ballani, Director General of the Indian Sugar and Bio-energy Manufacturers Association (ISMA), emphasised that the current ex-mill sugar prices, ranging from Rs 30-36 per kg, are below the production cost of Rs 41 per kg. 

He urged for a revision of the minimum selling price (MSP) of sugar and ethanol procurement prices to ensure the financial viability of sugar mills. 

The government is reportedly considering extending the sugar export ban to prioritise domestic supply and ethanol production, aiming to achieve a 20 per cent ethanol blend in gasoline by 2025-26. An increase in ethanol procurement prices by more than 5 per cent is also under deliberation. 

Industry stakeholders assert that aligning ethanol prices with the increased FRP is crucial to sustain the sugar sector, meet biofuel targets, and ensure timely payments to farmers.

(KNN Bureau)