The Indian Sugar Mills Association (ISMA) has formally requested a significant increase in the Minimum Selling Price (MSP) of sugar. The industry body is urging the central government to raise the MSP by more than ₹10 per kilogram.
Rationale Behind the Demand for Higher Sugar MSP
ISMA's plea is rooted in the escalating cost of sugarcane production and processing. The association argues that the current MSP of sugar, which was last revised in February 2024 to ₹31 per kilogram, is no longer sustainable. They point to a substantial rise in the Fair and Remunerative Price (FRP) for sugarcane, set by the government, as a primary driver. The FRP for the 2024-25 season is ₹340 per quintal, a notable increase from previous years.
The core argument is that mills need a higher sugar price to cover the increased cost of buying cane from farmers and to manage other rising operational expenses. These include costs related to transportation, labor, and compliance with environmental regulations. ISMA contends that without a corresponding hike in the sugar MSP, the financial health of sugar mills will be severely compromised, potentially affecting their ability to make timely payments to sugarcane growers.
Proposed New Price and Industry Implications
ISMA has proposed that the new Minimum Selling Price for sugar should be set at around ₹42 per kilogram. This adjustment, they state, is essential to ensure the viability of sugar mills across the country. A higher MSP would directly improve the cash flow of mills, enabling them to clear outstanding dues to farmers more efficiently and invest in maintaining and upgrading their operations.
The timing of this request is critical. The sugar season is a continuous cycle, and mills are preparing for the upcoming crushing period. A decision on the MSP has wide-reaching implications for millions of sugarcane farmers, numerous mill employees, and the overall stability of a key agricultural sector. The industry also highlights that a fair MSP is crucial for India to maintain its position as a major global sugar producer and exporter, ensuring the sector remains competitive.
Government's Role and Broader Economic Impact
The final decision rests with the central government, which must balance the interests of farmers, the industry, and consumers. The government uses the MSP mechanism as a tool to stabilize market prices and protect stakeholders. An increase in the sugar MSP could have a ripple effect on retail prices of sugar and sugar-containing products, contributing to broader food inflation trends.
However, ISMA emphasizes that the requested hike is a necessary correction to align with increased input costs and to safeguard the long-term sustainability of sugar production in India. The association's proposal underscores the ongoing challenge of reconciling farmer welfare with industrial viability in India's crucial agro-based economies. The government's response to this demand will be closely watched by all players in the agricultural and food processing landscape.
