Govt claim on assistance to sugar industry not correct: ISMA

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05 September 2021, New Delhi: The Indian Sugar Mill Association (ISMA) has objected to the Union government’s claim that the government’s assistance to the industry through various schemes, including the ethanol programme, is helping the industry compensate for lower sugar price realisation. 

ISMA, in a letter to the Prime Minister’s office, objected to a statement by Minister for Consumer Affairs, Food and Public Distribution Piyush Goyal that since the government is assisting the sugar industry through various other schemes there may not be any immediate need to increase the minimum selling price.

Increase in FRP

In the letter, ISMA President Niraj Shirgaokar said, “It is extremely important to note that around 80 per cent (or even more in some cases) of the total revenue of a sugar mill or company comes only from sugar, and that by-products like power, ethanol, etc contribute 15-20 per cent of the total revenue. Therefore, this understanding that the help of the government in other aspects, including ethanol, is enough to compensate for lower sugar price realisation, is not correct”.

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Last month, the Cabinet Committee on Economic Affairs approved Fair and Remunerative Price (FRP) of sugarcane for sugar season 2021-22 (October – September) at ₹290 per quintal for a basic recovery rate of 10 per cent. The ex-mill prices, which were hovering around ₹31-32 per kg from October 2020 till July 2021, have improved slightly in the month of August 2021 and are currently at around ₹35 per kg (because of the festival season). 

ISMA said that it believes that if the MSP of sugar is increased to ₹34-35 per kg, consequent to the increase of the FRP of sugarcane, there should not be any impact on food or general inflation because of the increase in MSP of sugar. 

This is because the MSP for sugar requested by the industry and various institutions and authorities is lower than the current ex-mill prices prevailing in the country.

“We hope and pray that you will take an immediate decision to increase the MSP of sugar to ₹35 per kg, and save sugar mills from the problem of shortage of liquidity and the resultant problem of high cane price arrears once again in the next season,” Shirgaokar said.

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