Sugar mills in Maharashtra are facing a critical battle for an increase in the Minimum Selling Price (MSP) of sugar. They argue that it is necessary to prevent the majority of mills from permanent closure. The Maharashtra State Co-operative Sugar Factories Federation Limited said failure to increase the MSP in line with the Fair and Remunerative Price (FRP) could have dire consequences.

The Centre recently approved a ₹25/quintal hike in the FRP of sugarcane for the 2024-25 season, following a ₹10/quintal increase last year. However, the MSP of sugar has remained unchanged at ₹3,100 per quintal since 2019, despite the annual increase in FRP.

Expressing concern over the situation, PR Patil, President of the Federation, said while the hike in FRP is welcome for farmers, most mills in the State may struggle to pay the increased FRP without a corresponding increase in MSP. Patil told businessline that the need for a ₹4,000 per quintal hike in MSP to prevent mill closures.

Increasing challenges

Sugar mills in western Maharashtra, known as the sugar bowl, are offering competitive prices to farmers. However, restrictions on ethanol production and low demand have added to the industry’s challenges. Despite requests to the State government to push for a hike in MSP and engage in dialogue with the Centre, no progress has been made.

Millers argue that a higher MSP would allow mills to obtain additional loans from banks, as the price of sugar stock would increase. This, in turn, would help clear sugarcane payments to farmers. However, with the government in a precautionary stance due to the upcoming elections, officials suggest that a hike in MSP is unlikely this season.

Millers are facing financial strain and uncertainty about the future of the industry. The hike in MSP will help industry to sustain and survive, said B B Thombre, President of WISMA.