ISMA warns of sugar industry crisis if ethanol prices remain unchanged
The Indian Sugar Mills Association (ISMA) has raised concerns about the financial sustainability of sugar mills due to unadjusted ethanol prices and recent declines in sugar prices. ISMA President Prabhakar Rao emphasized the need for government intervention, as ethanol has become an essential revenue stream for mills amidst fluctuating sugar prices. Additionally, delayed crushing seasons in Maharashtra and Karnataka, potentially impacted by local elections, have led to an oversupply, further depressing sugar prices. Increased cane costs due to the Fair & Remunerative Price (FRP) also add pressure on mills.
The Indian Sugar Mills Association (ISMA) has raised concerns over a potential crisis in the sugar industry, warning that many sugar mills could struggle if ethanol prices are not revised soon.
Ethanol production has become a crucial revenue source for sugar mills, especially as sugar prices fluctuate.
Ethanol sales allow mills to diversify their income streams, providing a stable revenue source that helps balance out losses when sugar prices drop.
In recent months, ethanol has become increasingly important as sugar prices have declined.
In an interview with CNBC-TV18, ISMA President Prabhakar Rao emphasised the urgency of government intervention to ensure stability of the sugar industry, and support the broader ethanol-blending initiatives.
Rao pointed out that the delays in the crushing season that is leading to a drop in sugar prices.
While the crushing season in key states like Maharashtra and Karnataka was set to begin in mid-November, Rao suggested that upcoming elections in Maharashtra could lead to further delays.
Average sugar prices, which stood at ₹38/kg last year, have now dropped to around ₹35-35.5/kg due to an excessive buildup of sugar stocks.
Despite the price drop of approximately ₹2/kg, the Fair & Remunerative Price (FRP) for sugarcane has increased by 6%. This rise in input costs puts further financial strain on mills, as they are required to buy sugarcane at a fixed government rate regardless of the market price of sugar.
Source Link : https://www.cnbctv18.com/market/commodities/ethanol-prices-sugar-frp-crushing-season-maharashtra-elections-isma-19503544.htm
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