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Sugar MSP to Jump 23% to ₹38/kg
24 Nov
Summary
- Minimum selling price of sugar to increase by nearly 23% to ₹38 per kg.
- This marks the first hike in sugar MSP in almost seven years.
- Proposed increase aims to boost mill liquidity and aid cane farmer payments.
The government is poised to implement a significant increase in the minimum selling price (MSP) for sugar, raising it by approximately 23% to ₹38 per kilogram. This marks the first adjustment to the sugar MSP in nearly seven years, which has remained at ₹31 per kg since February 2019. The proposed hike is a direct response to the industry's persistent calls for a price revision, driven by escalating production costs and inflation.
In tandem with the sugar MSP increase, there are indications that the government may also raise the procurement price for ethanol derived from sugarcane feedstock. These combined measures are intended to inject much-needed liquidity into sugar mills. Enhanced financial health for mills is critical for ensuring they can meet their payment obligations to sugarcane farmers, particularly as fair and remunerative prices for cane and other input costs continue to rise.
The industry has highlighted that ethanol revenues constitute over 20% of the total cane price payable to farmers. However, the prices for ethanol produced from B-heavy molasses and sugarcane juice have remained static since the Ethanol Supply Year (ESY) 2022-23. This stagnation, coupled with rising agricultural costs, has put pressure on mills' ability to manage farmer payments, making the anticipated price adjustments timely and essential for the sector's stability.
