The Indian Sugar Mills Association (ISMA) has once again written to the Prime Minister’s Office (PMO) to increase the Minimum Sale Price (MSP) of sugar from the current Rs 31 per kg to atleast Rs 34-35 per kg in line with the recent increase in Fair and Remunerative Price (FRP) sugarcane to Rs 290 per quintal.
ISMA said that it is not correct to say that higher realization from ethanol or other sources can compensate for lower realisation from sugar because even now 80 per cent of the total revenue of a sugar mill comes from sugar.
It said though FRP has been increased several times in the last few years, MSP of sugar has not been raised the last 30 months.
ISMA said any increase in MSP won’t impact the consumer price in the market ahead of the festival season as already the ex-mill price of sugar in the country is prevailing at around Rs 34-35 per kg.
“But, instead if MSP is raised by Rs 3-4 per kg, the valuation of sugar considered by the Banks to extend working capital loans increases which in turn should give the sugar mills an additional working capital or cash flow of Rs 10,000-12,000 crore that will help them to make payment to the farmers on time in the next season as also clear the current cane price arrears quickly,” ISMA said in the letter.