Industry seeks higher sugar price; Gadkari for reasonable rate

Amid demand from the industry to allow retail sugar prices to rise up to Rs 45/kg, Union Minister Nitin Gadkari today said the rates should be reasonable for consumers as the government has a difficult job to balance interest of all stakeholders.

Addressing the annual general meeting of Indian Sugar Mills Association (ISMA), Transport Minister Gadkari asked the debt-ridden industry to focus on ethanol and other by-products of sugarcane in order to improve their earnings.

He said the government is working on a policy to promote second generation bio-ethanol and sought suggestions from the sugar industry.

Responding to the industry's demand on retail sugar prices, Gadkari said: "The current level of sugar prices are giving some relief to the industry... The government has a difficult job to balance consumers, farmers and millers. Prices should be at a reasonable level for consumers." When sugar prices rise, farmers expect that their cane prices too should rise, he added.

Earlier in his address, ISMA President Tarun Sawhney said, "We urge the government to be sensitive of every increasing costs and allow retail sugar prices to increase to Rs 43 to 45 per kg in the sugar season 2016-17." He said the debt burden of the industry has increased dramatically over the last 3-4 years and that the current margins may not be adequate to repay past loans, which are due for principal repayment from 2017 itself.

The average ex-mill price of sugar during the last 2015-16 season was around Rs 31/kg, which was still below the all India average cost of production of Rs 33/kg, he added.

"Sugar prices should not be unrealistically controlled at such levels and that the industry is unable to survive and further not able to recover the losses that it incurred in years of surplus sugar production without sustained periods of positive cash flows and profits," Sawhney noted.

ISMA President said the country would have surplus production in the 2017-18 season (October-September) and there will not be requirement for imports in the next 12 months.

At present, the sugar prices are ruling at over Rs 40 per kg in most parts of the country, as per the official data.