The output of sugar mills rose by 20 per cent in the October to February period. The Indian Sugar Mills Association (ISMA) stated that 98 mills have stopped crushing by February end.
The Indian Sugar Mills Association (ISMA) said the minimum selling price (MSP) of sugar should be raised to Rs 34.5 per kg from the present Rs 31 per kg to help mills in clearing cane arrears to sugarcane farmers.
Sugar production stood at 233.77 lakh tonnes till February of 2020-21 marketing year as compared to 194.82 lakh tonnes in the corresponding period of the previous year. Sugar marketing year runs from October to September.
The current prices are almost Rs 80-100 per quintal less than what it was a year back during the corresponding period.
"This is not a good sign as low sugar prices, much below the cost of production for last several months, have adversely affected the liquidity of mills and their ability to pay the FRP (Fair and Remunerative Price) to cane farmers. It is feared that if such a situation persists then cane price arrears will jump very fast to uncomfortable levels," it added.
ISMA recommended for an upward revision of sugar MSP, which was last revised two years back when the FRP of sugarcane was at Rs 275 per quintal.
"Since the government has already increased the FRP of sugarcane by Rs 10 per quintal for the current year, there is need to increase the MSP of sugar to Rs 34.50 per kg after considering the increased FRP of sugarcane for 2020-21. There is need to quickly decide on increasing the MSP of sugar to ensure that sugar mills are able to pay to farmers on time," the association said.
Mills have contracted to export 3.2 million tonnes of sugar so far in the current marketing year, but shipments are slowed by shortage of trucks and containers as well as adequate availability of vessels at the ports, the association said.
"We hope for an early solution to these problems, especially as around 32 lakh tonnes of export contracts have been entered into at the end of February 2021," it said.
