New Delhi, 5th September 2024 – A delegation of South Indian sugar millers held meetings with Hon’ble Minister of Consumer Affairs, Food and Public Distribution Pralhad Joshi and Hon’ble Petroleum & Natural Gas Minister, Shri Hardeep Singh Puri, to address key issues concerning the sugar and ethanol industry.
The delegation expressed gratitude to both Ministers for the recent significant measures taken by the Government to relax restrictions, enabling sugar mills and distilleries to produce ethanol from sugarcane juice/syrup, B-Heavy molasses, and C-Heavy molasses as well as permitting the use of rice for ethanol production using Food Corporation of India (FCI) rice as feedstock up to a limit of 23 LMT. The delegation focused on the urgent need to provide a hike in the Minimum Support Price (MSP) for sugar, set at Rs. 31 per kg in February 2019, has remained unchanged despite the Fair and Remunerative Price (FRP) increasing significantly from Rs. 275 to Rs. 340 per quintal for the 2024-25 season. This discrepancy is creating a financial strain on the sugar industry, which is already grappling with rising costs in areas such as term loans, machinery depreciation, and other operational expenses. These factors cumulatively drive up the overall cost of sugar production. They emphasized that, raising the MSP is essential to enable sugar mills to cope with these escalating production costs. A higher and more realistic MSP, aligned with actual production expenses, would allow mills to cover their costs effectively and maintain the necessary liquidity to ensure timely payments to sugarcane farmers. This financial stability is not just beneficial but critical for the health of the industry, as it safeguards against cash flow issues and supports uninterrupted operations.
Further, the delegation discussed on revising ethanol pricing based on various feedstocks for the upcoming ESY 2024-25, while aligning these prices with the Fair and Remunerative Price (FRP) of sugarcane for ethanol produced from sugarcane juice/syrup, B-Heavy molasses, and C-Heavy molasses. A price increase for grain-based ethanol, particularly due to the rising cost of maize, was also emphasized. Other key issues included the necessity of increasing transportation costs, resolving significant delays in tanker decantation at OMC depots that is causing disturbance in the supply chain and imposing financial burdens on producers. Also, the delegation requested the Ministers to recommend OMCs to shorten the payment cycle from 21 days to 7 days, as farmers are the ultimate beneficiaries.
The delegation included notable industry leaders such as Dr. Murugesh Nirani, Chairman of the MRN Group, Mr. Mandava Prabhakar Rao of NSL Group, and Mr. Chandan Shirgaokar, Joint Managing Director at Ugar Sugar Works Ltd.
They stressed the importance of aligning the pricing mechanism with the cost of sugarcane. This revision is essential as the sugar industry is expected to supply approximately 55% of the ethanol required to meet the government’s target of a 20% ethanol blend by 2025. A fair and stable pricing structure would promote continued investment in ethanol production and contribute to the government’s efforts to reduce dependence on fossil fuels.
Both Union Ministers acknowledged the concerns brought forward by the delegation and reiterated the government’s commitment to the Ethanol Blending Program. They assured industry leaders that the government would work closely with stakeholders to address these issues and foster a favourable environment for the growth of ethanol production in the country.
