Sugar Sector Crisis May Worsen
29-Dec-2025 04:47 PM
Mumbai. The domestic sugar industry is currently facing numerous challenges, difficulties, and obstacles, for which it urgently needs policy support, assistance, and encouragement from the government.
On one hand, a good sugarcane harvest is expected to significantly increase sugar production and stock, while on the other hand, a softening of prices is being observed.
Similarly, the government has increased the sugar export quota from 10 lakh tonnes for the 2024-25 season to 15 lakh tonnes for the 2025-26 season,
but the use of sugar in ethanol production is likely to decrease to 34-35 lakh tonnes because oil marketing companies have allocated a limited quota for ethanol produced from sugar.
The industry's most important demand is an increase in the ex-factory minimum selling price of sugar. The ex-factory minimum selling price (MSP) of sugar was last increased by Rs. 200 to Rs. 3100 per quintal in February 2019, and there has been no increase since then.
Meanwhile, the Fair and Remunerative Price (FRP) of sugarcane has increased every year, and in some states, the State Advised Price (SAP) has also been increased, which is considerably higher than the FRP. The SAP system is in effect in five states: Uttar Pradesh, Uttarakhand, Punjab, Haryana, and Karnataka.
Due to the regular increase in sugarcane prices, the cost of sugar production has continuously risen, while the lack of change in the ex-factory MSP has exacerbated the industry's problems.
The cost of sugar production has jumped to Rs. 3900-4000 per quintal, while mills are forced to sell their sugar at Rs. 3600-3700 per quintal.
Thus, mills are incurring a financial loss of at least Rs. 300-400 per quintal on sugar production and sales.
This could lead to significant difficulties for sugar mills in paying the dues of sugarcane farmers. Due to massive production and limited off-take, the industry will accumulate a large stock of sugar, tying up its working capital.
The situation will worsen if sugarcane farmers do not receive timely payment for their produce. The government should carefully consider all these factors and take appropriate decisions as quickly as possible.