Industry players say that the government should increase MSP on sugar whenever the FRP on cane is hiked to avoid a cycle of high and low production.
The state advised price (SAP) in Uttar Pradesh for the current year has been fixed 5.7 percent higher over a year ago, adding to sugar mills' woes
Even as sugar output is projected to increase, the government is turning shy on allowing exports at last year’s level
Central cane price rises by 5 percent, highest since FY19. Softening of international sugar prices means mills will need government support to tide over higher costs
As Centre floats cabinet note on hiking fair and remunerative price which sugar mills pay farmers, what will be the impact on sugar prices? Watch this video to find out
The ruling is to be appealed and market conditions are currently favourable, but if upheld it could hurt industry in a downward business cycle
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The government’s measures are likely to result in an increase in sugar prices and moderate the decline in profitability of mills, thus enabling timely payment to farmers. However, overall profitability outlook for the sugar sector remains weak for FY19.
"If the government of India will put its foot down and say that FRP is going to be the only price, it will be very good news for the industry", M Manickam, Executive Vice Chairman of Sakthi Sugars told CNBC-TV18.
The government will on April 6 consider a proposal to keep fair and remunerative price for sugarcane unchanged at Rs 230 per quintal for the 2016-17 season.
The subsidy on cane prices is likely to be linked to sugar exports, say sources.
M Manickam, managing director, Sakthi Sugars also expresses concern over rising disparity in raw material and finished products price. He complained about the government not taking major steps to increase sugar price.