The sugar industry has represented to the Centre to hike the minimum support price for sugar to match the raw material, sugarcane price.
According reliable sources, the Indian Sugar Mills Association, has urged the Centre earlier this week to peg the minimum price of sugar at ₹33 a kg for mills in the south and the west and at ₹ 35 for North Indian mills. The Government had recently set the minimum ex-factory price at ₹29 a kg uniformly for sugar mills across the country in a bid to boost sugar prices. Previously sugar prices were ruling around ₹26 a kg well below the cost of production pegged at about ₹34.
Justifying the demand, industry sources said even at the statutory Fair and Remunerative Price of ₹2,550 a tonne for cane linked to 9.5 per cent sugar recovery, the cost of production works out close to ₹27 a kg. Mills end up paying 93 per cent of income from sugar for the cane. “How can mills operate or service their loans?” asked the source.
Further, mills in North India pay a higher price for cane, the State government recommended price of ₹3,200, which far exceeds income from sugar.
North Indian mills need to be paid a higher price for sugar because, in addition to paying farmers more, they produce medium grade sugar, a premium quality, as compared with small grained sugar made by mills in the South and West, according to the source.
Also, mills in the North do not have easy access to the sugar deficit markets in the East and the North East, he said.
Sugar prices had bottomed out following a surplus sugar production of about 32 million tonnes in the current October-September sugar season. Also, estimates set the coming year’s production to match if not top this output. The cash-strapped sugar mills have not been able to pay farmers for the sugarcane supplied. This had resulted in over dues mounting to over ₹22,000 crore. The minimum price for sugar was part of a package of measures announced by the Centre to support sugar mills pay farmers.