Articles by Sanjeeb Mukherjee

Sugar industry relieved as Centre allows 1.5 mt import

Amid the political push and pull, the Centres decision to allow sugar exports and remove the 50 per cent duty on molasses exports has rekindled hope in the industry that more relief may follow.Image used for representational purpose. Photograph: ANI PhotoThe Centres proposed move to permit 1.5 million tonnes (mt) of sugar exports in the 2025-26 season could come as a breather for the sector, which was facing a challenging time after what began as a promising season due to a bumper harvest.The sugar season runs from October to September. The challenges stemmed from both political and economic factors.On the one hand, there is growing clamour among farmers to raise the purchase price of sugarcane to offset rising input costs; on the other, the industry is struggling to absorb surplus production in 2025-26. The first blow to the sector came with the ethanol supply tender for the 2025-26 supply year that started in November. Of the total requirement of 1.04 billion litres of ethanol for 20 per cent blending, oil marketing companies (OMCs) allocated only about 0.28 billion litres to sugarcane-based feedstocks, which accounted for just 27-28 per cent of total requirement. Grain-based ethanol makers were allocated the remaining 72 per cent (0.76 billion litres).This was despite the sugar industry investing over ₹40,000 crore to create more than 9 billion litre ethanol capacity in line with NITI Aayogs 2021 Biofuel Roadmap (2020–25), which projected that the sugar sector would contribute about 55 per cent (0.55 billion litres) of the total ethanol requirement to achieve 20 per cent blending (E20) by 2025–26, the Indian Sugar and Bio-Energy Manufacturers Association (Isma) said in a statement in late October.This imbalance would lead to underutilisation of distilleries (below 50 per cent), reduced sugar diversion (around 3.4 mt against an expected 5 mt), and excess sugar stocks. Cash flow constraints could delay payments to farmers and risk cane arrears accumulation, especially when the sector already faces thin margins and high working capital requirements, Isma Director General Deepak Ballani recently said at a press conference.If that were not enough, in late October, Uttar Pradesh, the state with the largest number of private sugar mills, unexpectedly raised the State Advised Price (SAP) of sugarcane for the 2025-26 season by almost ₹30 per quintal. The hike takes the procurement price to about ₹400 per quintal for early-maturing varieties and ₹390 for common ones.The increase, one of the steepest under the Yogi Adityanath government, comes ahead of panchayat elections and the 2027 state assembly polls.Sugarcane pricing in UP is now linked to elections rather than input costs prescribed in the Sugarcane Act. The last increase came in 2023 ahead of the Lok Sabha polls, but since then, despite a 15-20 per cent rise in costs of labour, pesticides, and fertilisers, the SAP was unchanged. The current 8.11 per cent increase, coming ahead of the 2027 state elections, is too little, too late, Sudhir Panwar, former member of the UP Planning Commission, had told Business Standard.Industry players, while welcoming the SAP hike, said it may benefit farmers but could squeeze millers margins by raising production costs from ₹41 per kg to nearly ₹42–43 per kg.Some experts said the sharp increase, which has been lauded by farmer groups, is meant to consolidate the ruling BJPs support in the Jat heartland of western UP.The UP decision was soon followed by protests from sugarcane farmers in North Karnataka demanding a better price equivalent to around ₹355 per quintal.North Karnataka, a BJP stronghold, witnessed widespread road blockades that gained support from the Opposition party. The agitation ended last week after the Siddaramaiah-led Congress government agreed to raise the purchase price from ₹320 to ₹330 per quintal.This extra burden of ₹10 per quintal would be shared equally between the state government and the millers, Siddaramaiah said after a seven-hour meeting between protesting farmers, sugar mills, and officials.Union Food Minister Prahlad Joshi, who hails from Karnataka, had also weighed in, writing to the chief minister that at an average recovery rate of 10.5 per cent, the FRP for sugarcane farmers should be ₹363 per quintal.Of late, sugarcane farmers in Punjab have demanded an increase in procurement prices to ₹500 per quintal from the current ₹400. Punjab, Haryana, and UP are among the states that fix a State Advised Price (SAP) for sugarcane.Amid the political push and pull, the Centres decision to allow sugar exports and remove the 50 per cent duty on molasses exports has rekindled hope in the industry that more relief may follow.We are hopeful that the Centre will also raise the procurement price of ethanol produced from sugarcane juice, syrup, and B-heavy molasses, which has remained unchanged for two years, by at least ₹3 per litre, and permit exports of ethanol, not just molasses, to absorb the surplus, a senior industry official said.He added that the export decision has made them hopeful that things may finally be turning in favour of the sugar sector in the corridors of power.

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Articles by Sanjeeb Mukherjee

Sugar industry relieved as Centre allows 1.5 mt import

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