With the commencement of the sugar season 2025-26, the National Federation of Cooperative Sugar Factories Limited (NFCSF) welcomed the sugar export decision and urged the government to increase the minimum selling price (MSP) of sugar to Rs. 41 per kg, revise ethanol prices, along with approval for additional sugar diversion for ethanol production citing stagnant prices and rising production costs.
In a letter to Food Minister Pralhad Joshi, NFCSF said, “Due to the timely interventions of the Government, the issue of mounting cane arrears has been significantly reduced, and we expect the same consistency in the current sugar season as well. At the prevailing FRP of Rs. 355 per quintal, the industry will be required to disburse more than Rs. 1.25 lakh crore as cane price to sugarcane farmers. To ensure timely payment of this substantial amount and to maintain the financial viability of the mills, the increase in sugar MSP and revision in ethanol prices required.”
The cooperative sugar body added, “Ex-mill sugar prices have remained above Rs.38.50 per kg since February 2025. In accordance with Section 9 of the Sugar (Control) Order, 2025, and considering the 4.42% increase in FRP along with the rise in inflation-linked input costs, revision of the sugar MSP to Rs. 41 per kg is both justified and logical. It is therefore imperative that the sugar MSP be revised upward to reflect the actual cost of production and the current operational realities of the sector.”
NFCSF emphasised that a revised sugar MSP will provide statutory price stability, improve liquidity, ensure timely cane price payments, and enable cooperative and rural banks to undertake fair valuation of sugar stocks for working capital assessment of cooperative sugar mills. Aligning the Sugar MSP with prevailing market conditions will also enhance access to pledge-based financing, which is critical for uninterrupted mill operations throughout the season.
NFCSF highlighted that the Ethanol Blended Petrol (EBP) Programme has played a vital role in balancing sugar availability and improving mill liquidity. However, ethanol procurement prices for ESY 2023-24, 2024-25, and 2025-26 have not been revised, despite a 16.40% increase in FRP and a significant escalation in operational and processing costs. Additionally, the five-year window of the interest subvention scheme has now ended, increasing the interest burden on sugar mills that have set up distillery projects under this support framework.
“Prices for Ethanol produced from B-heavy molasses and sugarcane juice/syrup have remained unchanged since ESY 2022-23. At the same time, Ethanol revenues contribute more than 20% of the total cane price payable to sugarcane farmers. Non-revision of Ethanol prices, therefore, adversely affects the ability of mills to meet their cane payment obligations, especially when FRP and other input costs continue to rise,” it further added.
NFCSF urged that ethanol prices for all sugar based feedstocksparticularly B-heavy molasses and juice/syrup-based ethanol-be revised upward in proportion to the prevailing FRP and actual cost structure. Such a revision will strengthen liquidity for sugar mills operating distilleries and enable them to make timely cane payments to sugarcane farmers in a time-bound manner.
The cooperative sugar body also requested approval for additional sugar diversion for ethanol production. It said, “The Ministry of Petroleum and Natural Gas has allocated 289 crore litres of Ethanol against industry offers of 471 crore litres for ESY 2025тАУ26. It is important to highlight that the sugar industry supplied 317 crore litres of ethanol in ESY 2024-25, generating revenue of Rs. 19,945 crore. However, based on the current allocation, the industry is expected to realise only Rs. 18,330 crore in ESY 2025-26-a reduction of Rs. 1,615 crore, despite the fact that sugar production in the 2024-25 season was the lowest in the last 10 years.”
“In order to bridge this revenue gap and strengthen mill liquidity for timely cane payments, we request approval to divert an additional 5 LMT of sugar, which can yield approximately 30 crore litres of ethanol. This adeditional. ethanol production may generate nearly Rs. 2,000 crore, directly supporting timely payments to sugarcane farmers,” NFCSF further added.
