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.
