Sugar ex-mill prices under pressure, dire need of hike in MSP : ISMA

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With the announcement of sugar export policy by the Government on Wednesday, the sugar industry is expected to respond in the similar manner as during the last year and is confident of achieving the target of 60 lakh tons of sugar export, considering the demand from importing countries like Indonesia, Malaysia etc.

The industry is also awaiting the Government decision on increase in Minimum Selling Price (MSP) of sugar, which was last revised almost 2 years back. Since the Government has already increased the FRP of sugarcane by Rs.10 per quintal for the current year, there is need to increase the MSP of sugar to Rs. 34.50 per kg. after considering the increased FRP of sugarcane for 2020-21 SS. The Ex – mill sugar prices are under pressure in most of the States and to ensure that sugar mills are able to pay to farmers on time, there is need to quickly decide on increasing the MSP of sugar.

The late decision on Minimum Selling Price (MSP) has already adversely affected the cane payment ability of the sugar millers. The current cane price arrears are reported to be about Rs. 3500 crore and if MSP is not increased quickly, the arrears will jump very fast to uncomfortable levels.

As on 15th December, 2020, 460 sugar mills were crushing sugarcane for the year 2020-21 SS and they have produced 73.77 lac tons of sugar, i.e. 27.96 lac tons higher than the sugar production on the corresponding date of previous sugar season, of 45.81 lac tons of sugar. Last year on the corresponding date, 412 mills were operating.

In Uttar Pradesh, 118 mills have produced 22.60 lac tons of sugar till 15th December, 2020, 1.35 lac tons higher than last year, when 119 sugar mills had together produced 21.25 lac tons on the corresponding period.

In Maharashtra, 173 sugar mills are in operation and they have produced 26.96 lac tons of sugar till 15th December, 2020. In 2019-20 SS, 124 sugar mills were in operation as on 15th December, 2019 and they had produced 7.66 lac tons. Current year production is about 19.30 lac tons higher than the last year figure on the corresponding date. The higher production is because of earlier start of crushing operations in Maharashtra and higher availability of sugarcane in this season.

Similarly, in the third largest producer of sugar viz. Karnataka, 64 sugar mills are in operation who have produced 16.65 lac tons of sugar till 15th December, 2020. This is about 6.03 lac tons higher than the last year sugar production of 10.62 lac tons in 2019-20 SS as on 15th December, 2019.

In Gujarat, 15 sugar mills are in operation and they have produced 2.40 lac tons of sugar till 15th December, 2020. In 2019-20 SS, as on 15th December, 2019 when similar number of sugar mills were in operation and had produced 1.52 lac tons of sugar till that date.

There are 10 sugar mills in operation in Tamil Nadu and sugar production till 15th December, 2020 was about 0.8 lac tons, as compared to 0.73 lac tons produced by similar number of sugar mills as on 15th December, 2019.

Crushing operations in all the other States have also begun and the pace of crushing is picking up. About 80 sugar mills are operating in other States who have collectively produced 4.36 lac tons of sugar in this season upto 15th December, 2020, which in the previous season was 4.03 lac tons, when 81 mills were operating as on 15th December, 2019.

As per trade and market sources, about 2.5 – 3 lac tons of sugar have been physically exported in the current sugar season so far after 1st October’ 2020, which will be accounted for against the MAEQ of last season 2019-20 as the export policy for last year was extended upto 31st December’ 2020, thus almost fully achieving the target of 60 lakh tons of sugar export for 2019 – 20 SS.

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