Millers face financial pressure as sugar prices drop, claim payment delays to farmers expected
Sugar millers are facing financial strain as market prices for sugar have dropped at the start of the 2024-25 season, making it difficult to pay farmers on time. With sugar prices at around Rs 3300 per quintal, and uncertainty about the government’s response to increasing the Minimum Selling Price (MSP), mills are concerned about their ability to meet payment deadlines. Industry leaders, like Rahul Ghatge of Shri Gurudatt Sugars, warn that 25% of cane arrears could remain unpaid by season’s end unless the MSP is raised. The gap between the increasing Fair Remunerative Price (FRP) for sugarcane and the stagnant MSP is putting pressure on millers.
Sugar millers claim they are facing a difficult situation as the price of sugar in the market has dropped with the start of the new season. This decline in sugar prices will make it harder for mills to generate enough revenue to pay farmers for their sugarcane on time.
As the 2024-25 sugar season begins, mills are required to make payments to farmers within 14 days of purchasing sugarcane. However, with the current low sugar prices, millers are concerned that they may not be able to raise enough funds to meet these payment deadlines.
According to market experts, the current price of S/30 sugar in Central Maharashtra is around Rs 3300 per quintal. With the new season starting, selling pressure in the market is expected to increase, and prices are likely to fall further.
There is also uncertainty about whether the government will increase the Minimum Selling Price (MSP) for sugar, which could help mills maintain a steady cash flow. Without clarity on the MSP, sugar mills claim they are unsure how they will manage to pay farmers and keep their operations running smoothly.
Rahul Ghatge, Executive Director of Shri Gurudatt Sugars, while speaking to ChiniMandi, said, “Millers are facing financial pressure due to low sugar prices, and if these financial challenges persist, there is a risk that sugarcane payments could be delayed in the current season, creating additional stress for both millers and farmers. As a result, we expect that by the end of the season, 25 percent of cane arrears will be pending. Therefore, there is an urgent need to increase the sugar MSP to reduce the financial pressure on sugar mills and ensure timely cane payments.”
In June 2018, the Indian government set the MSP of sugar for the first time at Rs. 29 per kg, when the Fair Remunerative Price (FRP) for sugarcane was Rs. 2,550 per tonne. However, while the FRP has been steadily increasing, the MSP for sugar has remained unchanged since February 2019. The FRP of sugarcane climbed significantly from Rs. 2,550 per tonne in 2017-18 to Rs. 3,400 per tonne in the 2024-25 season. In contrast, the MSP of sugar has remained at Rs. 31 per kg since 2018-19.
Millers are hoping for a positive response from the government regarding the sugar MSP, which could ease their financial burden and help ensure timely payments to farmers.
Recently, representatives from various sugar mill associations met with Union Ministers to discuss critical issues affecting the sugar industry. The associations emphasized the need to raise the sugar MSP and the ethanol purchase price.
Highlighting the growing gap between the rising FRP for sugarcane and the stagnant sugar MSP, industry representatives are urging the government to address this issue by raising the sugar MSP.
To read more about Sugar Industry continue reading Agriinsite.com
Source : Chinimandi
Recommended for you
Leave a Reply
Leave a Reply
