SAP Hike Aggravates Sugar Industry Crisis

20-Jan-2026 03:51 PM

New Delhi: A new report by the top industry body, the Indian Sugar and Bio-Energy Manufacturers Association (ISMA), states that the State Advised Price (SAP) for sugarcane is already in effect in Uttar Pradesh, Karnataka, Uttarakhand, Punjab, and Haryana, while Bihar has now also decided to increase it by Rs. 15, setting it at Rs. 380 per quintal for early varieties.

According to ISMA, while the increase in SAP will provide relief to sugarcane growers, it will also increase the cost of sugar production. The gap between the two is widening.

On the other hand, the ex-factory selling price of sugar has fallen to around Rs. 3550 per quintal in states like Maharashtra and Karnataka, which is significantly below its average cost of production.

This is deepening the financial crisis for sugar mills and could lead to serious difficulties in paying outstanding dues to sugarcane farmers.

As the season progresses, the stock of sugar with the mills will also increase. There are indications that the outstanding dues of sugarcane growers to the sugar mills are rising and are likely to increase further. The current state of the domestic sugar market is not favorable for the industry.

With a huge stock of sugar accumulating, the mills' working capital will be tied up, and they will not have the cash to pay the outstanding dues to sugarcane farmers.

In light of this, the government should review the minimum ex-factory selling price (MSP) of sugar as soon as possible and increase it in line with the cost of sugar production to provide some relief to the mills.