Paswan rules out hike in sugar MSP

Union Food Minister Ram Vilas Paswan on Thursday said that the government does not want to increase the minimum selling price (MSP) of sugar, as demanded by the industry, to protect the interests of consumers.

Speaking on the sidelines of Globoil India here, the minister said, “The government is very prompt in its action for the betterment of cane farmers and the sugar industry. To protect the interests of cane farmers and the sugar industry, the government approved a ~55 billion package for the industry, which includes transport subsidy and benefits to allied services. There is no room for further increase in sugar MSP which even farmers know very well.”

To arrest the continuous fall in sugar prices, the Centre in June fixed the MSP at ~29 a kg. This price, according to the government, is sufficient to cover the cost of production and profit of mills. Sugar mills have been demanding ~5 hike in MSP to ~34 a kg which industry experts believe to be the cost of production following an increase in sugarcane fair and remunerative price (FRP).

In May this year, the Centre raised cane FRP by ~25 to ~255 a quintal for 2017-18 and further ~20 to ~275 a quintal for 2018-19. Apart from that, costs of labour and transport have also gone up significantly over the last few years, resulting into an increase in the cost of sugar production.

“With incentives in place, sugar mills have been able to bring down their cane arrears to ~129 billion now from ~200 billion earlier. Mills will be able to further bring down cane arrears with the recently announced package and other favourable measures adopted by the government, including buffer stock and export subsidy, among others,” the minister said.

Meanwhile, the government raised export subsidy to ~13.88 a kg for this year compared to ~5.50 a kg offered last year. Also, the government allowed 5 million tonnes of sugar exports for the year 201819 beginning October 2018 compared to 2 million tonnes allowed for the previous year under the duty free import authorisation (DFIA) scheme. Under this scheme, exporters are allowed to import sugar at zero duty within three years.