Government May Hike Sugar MSP, Consider Exports to Address Rising Cane Arrears

Taking into consideration the expected rise in the number of sugarcane arrears for the month of January, the government has decided to raise the support price and take appropriate steps in this regard. This was stated by Food Secretary Sanjiv Chopra on Thursday.

The Indian Sugar and Bio-Energy Manufacturers Association, or ISMA, has reported that sugarcane arrears have been rising and reached Rs 2,000 crore as of 30 November in Maharashtra. According to ISMA, mills are facing a cash crunch due to oversupply, high production costs, low ethanol allocations, falling domestic prices, and global oversupply.

Speaking during ISMA's annual general meeting, Chopra said, "They (ISMA) have informed us that the problem regarding sugarcane dues will begin in mid-January. We are aware of this deadline and are working on it. In the next one month, we will take some decisions that will help the industry and ensure timely payments to farmers." The government is considering all options to provide relief to farmers. These measures include revising the MSP, allowing exports beyond the current level of 1.5 million tonnes, and increasing allocations for ethanol.

The sugar MSP has remained unchanged at Rs. 31 per kilogram since February 2019. ISMA has demanded a revision to Rs. 41.66 per kilogram. Acknowledging that the surplus sugar this year is a "challenge," Chopra said, "We are actively considering all of them and hope that, in the interest of all stakeholders, we will come up with solutions that will ensure that all stakeholders in the sugar industry receive their due."

Because of the increased production of sugarcane in the country, the estimation of sugar production for the 2025-26 season (October to September) is 34.3 million tonnes. The allocation of ethanol production using sugarcane/molasses has so far not exceeded 28 percent, and hence only about 3.4 million tonnes of sugar is required for ethanol production.

"We thought it would be higher, but now we are facing a situation where it is only 3.4 million tonnes," he said while addressing the event. The government has already allowed exports of 1.5 million tonnes to help the industry. Chopra said export parity is currently an issue, but it is expected to improve after the Brazilian sugar production season ends next month, allowing mills to sell stocks profitably.

He said, "We are well aware that excess stock should not be allowed to accumulate. We also know that the next sugarcane season will be even better. Therefore, we have to ensure that stock accumulation is prevented as much as possible and sugarcane farmers get their dues on time."