The Indian Sugar Mills Association (ISMA) said the minimum selling price (MSP) of sugar should be raised to Rs 34.5 per kg from the present Rs 31 per kg to help mills in clearing cane arrears to sugarcane farmers.
Sugar production stood at 233.77 lakh tonnes till February of 2020-21 marketing year as compared to 194.82 lakh tonnes in the corresponding period of the previous year. Sugar marketing year runs from October to September.
During October 2020 and February 2021 period, sugar production in Maharashtra rose to 84.85 lakh tonnes compared with 50.70 lakh tonnes in the year-ago period.
In Uttar Pradesh, sugar output is lower at 74.20 lakh tonnes till February of this marketing year compared with 76.86 lakh tonnes in the previous year.
Sugar production in Karnataka has increased to 40.53 lakh tonnes from 32.60 lakh tonnes.
"...the ex-mill prices in most of the states are under pressure and are showing downward trend as average prices in Tamil Nadu are hovering between Rs 3,200–3,225 per quintal, while in northern states the ex-mill prices are in the range of Rs 3,160–3,180 per quintal. Whereas, ex-mill prices in Maharashtra and Karnataka are reeling at MSP of sugar," ISMA said.
The current prices are almost Rs 80-100 per quintal less than what it was a year back during the corresponding period.
"This is not a good sign as low sugar prices, much below the cost of production for last several months, have adversely affected the liquidity of mills and their ability to pay the FRP (Fair and Remunerative Price) to cane farmers. It is feared that if such situation persists then cane price arrears will jump very fast to uncomfortable levels," it added.
ISMA recommended for an upward revision of sugar MSP, which was last revised two years back when the FRP of sugarcane was at Rs 275 per quintal.
"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. There is need to quickly decide on increasing the MSP of sugar to ensure that sugar mills are able to pay to farmers on time," the association said.
On the export front, ISMA said mills are facing problems of shortage of trucks and containers as well as adequate availability of vessels at the ports, which have been taken up with the government and the concerned authorities.
"We hope for an early solution to these problems, especially as around 32 lakh tonnes of export contracts have been entered into at the end of February 2021," it said.
The Centre is providing financial assistance to mills to export sugar.