New Delhi [India], December 18 : The Indian Sugar and Bio-energy Manufacturers Association (ISMA) has flagged concerns over surplus sugar stocks and falling prices, urging the central government to revise the minimum support price (MSP) of sugar and ethanol procurement prices to protect farmers and mills.
Speaking on the current situation, Deepak Ballani, Director General, ISMA, said, "The most important request of the government is the revision of minimum support price of sugar. As we all know that the MSP was not revised for last six years."
Talking toon the sidelines of the Annual General Meeting of ISMA, he noted that the industry is facing a "typical problem of excess stock" this year, with sugar production estimated at around 34 million tons, while domestic consumption remains sluggish.
According to Ballani, domestic consumption is almost 28.5 lakh tons, and diversion towards ethanol has also declined compared to last year.
"We are diverting lesser than last year in ethanol, which is only 3.4 million tons," he said, adding that even after accounting for "1.5 million of exports, we will have a huge stock in the country."
The surplus has already begun to hurt prices, he said.
"That is already showing the signs of putting downward pressure on the ex-mill prices," Ballani said, pointing out that "Ex-mill prices in Maharashtra has gone down by almost 2 rupees to 1.5 rupees a kilo which is much below the cost of production."
He stressed that the cost of production, factoring in higher FRP and SAP, is around Rs 41 per kg, making MSP revision critical.
Ballani also highlighted the need to revise ethanol procurement prices.
"As we all know the ethanol price from sugarcane feedstock specifically juice and B heavy has not been revised for last three years although the FRP has gone up by almost 16-17 percent," he said.
With industry investments of about Rs 40,000 crore, he emphasized the need for viable returns so mills can pay farmers on time.
On managing surplus stock, Ballani suggested, "The solution is that we need to divert more towards ethanol."
He also called for better export parity, noting that "at the moment, there isn't a very good parity," though some exports have begun.
"At the moment, there isn't a very good parity. Although one and a half lakh tons of sugar has been contracted. But we are hoping that January starting until March end we will have a trade flow for low quality whites in global sugar market. And we are hoping that we will be able to exhaust most of our export quota by end of March," he said.
Looking ahead, ISMA will host Sugar Nxt, its first technical conclave, on April 7-8 in New Delhi, aimed at enhancing energy efficiency, promoting new technologies, and providing startups a platform to help reduce production costs in the sugar sector.
Earlier in the day, Secretary at Department of Food and Public Distribution, Sanjeev Chopra, speaking at the AGM , said the government was actively considering some interventions for the sugar industry, but stopped short of giving a specific timeline.
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