News Capsule: Rising cane arrears, likelihood of MSP hike increases

19-Dec-2025 11:04 AM

News Capsule: Rising cane arrears, likelihood of MSP hike increases

★ The central government is likely to take key decisions next month to address concerns of surplus sugar production and rising sugarcane arrears. The Food Secretary said the government is considering options such as raising the minimum selling price (MSP) of sugar from ₹33 per kg to ₹41 per kg, increasing ethanol diversion from sugarcane from 28% to 50%, and enhancing sugar exports beyond the current 1.5 million tonnes.

★ While cane arrears are not very high at present, they are expected to rise over the next one to one-and-a-half months. Industry estimates suggest that closing sugar stocks in the 2025-26 season could be around 6 million tonnes, and the government may intervene to reduce excess stocks to protect farmers.

★ According to ISMA, sugarcane arrears in Maharashtra have already reached around ₹2,000 crore. The industry has highlighted that falling domestic sugar prices and weak global markets have slowed exports. Limited ethanol diversion in 2025-26 has further increased pressure on mill finances, strengthening the demand for an MSP hike.