India defers plan to hike minimum selling price of sugar, for now
With the average retail selling price hovering around ₹45/kg, the Committee of Ministers, headed by Home Minister Amit Shah, has reportedly deferred a proposal to raise the minimum selling price (MSP) of sugar for now. The last price revision happened six years ago, though.
With a view to protect the interests of farmers, the concept of sugar MSP was introduced from June 2018 so that industry may get at least the minimum cost of production of sugar. It was also aimed at enabling sugar mills to clear cane price dues of farmers, officials said.
After the sugar MSP was fixed at ₹29/kg in 2018, the Government raised it to ₹31 in 2019. After that, there has been no revision in the MSP. The sugar industry has been urging the government for a revision in MSP over the past couple of years, but the issue has not been addressed due to various reasons.
Shrinking difference
Even, the Commission for Agricultural Costs and Prices (CACP) had earlier recommended for regular revision of sugar MSP, based on the hike give in fair and remunerative price (FRP) of sugarcane.
In the sugarcane price policy report for 2024-25 season (October-September), the CACP said the difference between retail and wholesale price of sugar showed a declining trend during last three sugar seasons.
Both wholesale as well as retail prices of sugar have remained well above the MSP during the last five seasons, the CACP said in the report, adding that both wholesale and retail prices of sugar witnessed a steady increase in the six months to September 2023, and reached ₹4,025 a quintal and ₹4,343 a quintal, respectively.
Dual pricing
The Commission said sugar prices should be ideally determined by market supply and demand dynamics. At the same time, it suggested “dual pricing” for the industrial and domestic sectors could be an alternative in view of the fact that industrial/commercial sector uses a significant amount of sugar produced in the country.
“Dual pricing in sugar, an instrument for providing a certain quantity of sugar to household consumers at reasonable/affordable price and for allowing mills to sell a portion of their output to commercial consumers at a high price could be long-term option to bridge the gap between rising production costs and realised sugar prices,” the CACP report said.
In first week of September, Indian Sugar and Bio-Energy Manufacturers Association (ISMA) and National Federation of Cooperative Sugar Factories had in a joint memorandum had sought revision in MSP of sugar citing that the cane FRP was Rs 255/quintal when last MSP was revised in 2019 has since increased to Rs 340/quintal now.