Policy Updates Indian Sugar 14-Jun-2024

Sugarcane FRP and Sugar MSP:

  • The current MSP of sugar is INR 31 per kg, while sugar mills are demanding it to increase to INR 41 per kg.
  • While sugarcane Fair and Remunerative Price (FRP) steadily increased from INR 275 per 100 kg in 2018-19 to INR 340.2 Kg for 2024-25, the MSP of sugar has been kept constant at INR 31 per Kg throughout.
  • The Government of India (GOI) in Feb’24 raised the Fair and Remunerative Price (FRP) of sugarcane to INR 340 per quintal at a sugar recovery rate of 10.25% for the upcoming season 2024-25 that starts from Oct’24. This is about 8% higher than the FRP of sugarcane for the current season 2023-24.
  • At an ex-mill price of INR 35-36 per Kg the financial viability of the mills will be affected as well as the timely cane payment to farmers.
  • Thus, with the revised FRP of INR 340/quintal, the industry has been seeking to increase sugar MSP to INR 40-41 per Kg in line with the FRP hike.
  • Speculation in the market that the government is considering hiking MSP (could be a reasonable hike of INR 4-6) for the 2024-25 season will keep prices supported in the coming weeks of the month.