Relief news for farmers, Minimum Support Price of sugar likely to increase, know how much the increase can be?

Sugar MSP rate for the upcoming season: There is a relief news for farmers. The minimum support price of sugar is likely to increase due to the expectation of a good sugarcane crop. A senior central government official said on the condition of anonymity that the government is considering increasing the minimum support price of sugar for the next sugar season starting in October.

It is worth noting that the minimum support price of sugar is Rs. 31 per kg unchanged since 2019. The sugar industry has increased the minimum support price of sugar to Rs. 40-41 per kg for a long time. According to a media report, Deepak Ballani, Director General of All India Sugar and Bio-Energy Manufacturers Association, said that when the fair and remunerative price (FRP) increases, the minimum support price of sugar should also increase.

FRP increased by 7.4%

The Cabinet Committee on Economic Affairs has fixed the FRP of sugarcane for sugar season 2024-25 (October-September) at a record 7.4% or Rs. 25. 340 per 100 kg allowing a baseline recovery rate of 10.25%.

Sugar production fell in UP

According to the latest sugar sector analysis by brokerage Centrum, the state of Uttar Pradesh has recorded a sharp decline (-10% y-o-y) in crushing activity for sugar season 2023-24, mainly due to poor yields due to red rot disease. However, sugar production in Maharashtra was 11.0 MMT as against 10.5 MMT in SSY23. Sugar recovery data for SSY24 improved by 10.09% y-o-y due to lower diversion across the country, which is at par with last year. As of May 31, 2024, state-wise crushing data for SSY24 shows that sugar production has been lower by 31.7 MMT as against 32.6 MMT in the previous season. Sugarcane crushing activity declined by 5.4% to around 314 MMT as against 332 MMT in SSY23.

Ethanol prices are also expected to increase by 3 percent

The central government has increased focus on reducing fossil fuel consumption and increasing the use of ethanol. As a result, the sector is expected to witness positive growth with increased diversion of sugar. The industry expects ethanol prices to rise by more than 3 per cent in the next season.