As the new Government takes office, there are a lot of expectations. For the sugar industry, topping the wish-list is an upward revision of sugar MSP, which has remained unchanged even after successive revisions in cane FRP.
Speaking exclusively to ChiniMandi, Vijendra Singh, Executive Director & Dy. CEO, Shree Renuka Sugars and President of SISMA (Karnataka) said as the new Government takes office, immediate policy changes are anticipated. Key among these is increase in sugar MSP and providing assurance to the industry regarding the continuation of the Ethanol Blending Policy (EBP). This assurance is crucial to encourage ongoing investment in distillery expansion and maintenance, ensuring efficient ethanol production for the 2024-25 sugar season.
Q. What immediate policy changes or initiatives do you expect the new government to implement in the first 100 days?
Ans: The industry has suffered a setback in the last year on account of abrupt restrictions imposed by the Government on the diversion of sugar towards ethanol production. We expect the new Government to provide immediate assurance to the industry that the Ethanol Blending Policy (EBP) will continue to run on full blast in the upcoming season so that the industry continues to invest in the expansion and maintenance of distilleries. This will ensure that next sugar season of 2024,25, the sugar mills produce ethanol as per the need of EBP. It is important to note that sugar inventories have gone up which is putting an additional interest burden on the industry.
Q. Do you expect the new government to revise the Minimum Support Price (MSP) for sugar after coming to power?
Ans: The sugar MSP has not been revised for some time now. However, the FRP price has been announced with an increase of 8% for next year. This has created a gap in the cost of production and the sale prices leading to financial stress for the industry. I feel that the MSP of sugar should be increased in line with sugarcane FRP and inflation so that the industry remains healthy and continues to make cane payments to farmers on time.
Q. What immediate policy reforms should the new government undertake to support the ethanol blending program?
Ans: As previously mentioned, EBP should operate at full capacity to benefit all stakeholders. Further, the following measures need to be taken by the government to ensure long-term stability of the EBP:
The Government should announce ethanol offtake prices for the next five years to provide price stability and predictability for investors and ethanol producers. They should create a mechanism for ethanol price increase simultaneously with FRP price revisions. This will bring back the confidence in EBP.
The current ethanol blending rate has reached 12% and is projected to hit 15% next year. However, to achieve a further increase to 20% or more, the immediate introduction of flex-fuel vehicles is essential. Hence policies need to be introduced to mandate the production and sale of flex-fuel vehicles, which can run on higher ethanol blends (E20 and above). There is a need to ramp up investments for the development of infrastructure for ethanol production, storage and distribution, including rail transport of ethanol.
The Government should also consider some tax incentives or reductions in taxes on ethanol blended petrol, to encourage acceptance of ethanol blended petrol which has multiple benefits to the country.
Q. How should the new government engage with industry stakeholders, including farmers, mill owners, and traders, in the first 100 days?
Ans- The Government should engage with stakeholders for consultations which could be organised through industry bodies like ISMA to gather their concerns, expectations, and suggestions. Additionally, while setting the FRP for sugarcane prices, it is crucial to also determine the MSP for sugar and ethanol offtake prices in collaboration with the industry. This approach will ensure that all stakeholders effectively contribute to the success of the Ethanol Blending Program (EBP).
