Chhatrapati Sambhajinagar: The minimum selling price (MSP) of sugar should be interrelated with the fair and remunerative price (FRP) of sugarcane. The FRP should be revised to take into account conversion costs, financial interest on overhead, holding costs, and standard return, and it should have a clear linkage with the MSP.
In 2009-10, the central government began fixing the fair and remunerative price for sugarcane, which increased by almost 60% to Rs. 1298.40. However, sugar prices did not increase to this extent, leaving sugar mills struggling to cover their raw material and process costs. The release mechanism for sugar was deregulated in 2012-13, resulting in the price of sugar falling significantly. To address this situation, the central government introduced a release mechanism and fixed the MSP of sugar at Rs 2,900 per quintal in 2018. However, wholesalers and traders were able to buy sugar as needed without investing any money, depleting sugar mill stocks and leaving the mills with insufficient liquidity to pay sugarcane bills.
These difficulties prompted the central government to raise the MSP of sugar from Rs. 2900 per quintal to Rs 3100/- per quintal from 2018-19. The Commission for Agricultural Cost Price has recommended that sugar rates should ideally be determined according to the supply and demand situation and revised at regular intervals to balance the interests of all stakeholders.
There is a need for a comprehensive approach to pricing that considers all factors, including conversion costs, overheads, holding costs, and standard return. This approach will help balance the interests of all stakeholders and ensure that sugar mills remain profitable while providing fair prices for sugarcane farmers.
(The writer is Managing Director, Karmayogi Ankushrao Tope Samarth Sahakari Sakhar Karkhana Ltd, Ambad tehsil, Jalna).