The government is mulling an increase in the minimum sale price of sugar after raising the fair and remunerative price (FRP) of sugarcane to Rs 340 a quintal from Rs 315 for the marketing season 2024-25 (October-September).

Senior food ministry officials said that “the government is aware of the demand of the mills and we are hopeful of finding a solution which will address the industry’s concerns and that of the consumers”.

The mills have urged the Centre to increase the MSP of sugar from the current level of Rs 31 per kg to at least Rs 36-37 per kg in line with the hike in the FRP. The MSP has remained unchanged since 2018.

In June 2018, the government brought in the concept of MSP for sugar to help the industry recover the minimum cost of production of the sweetener, making it easier for them to clear dues to cane farmers.

Analysts said the government would have to balance the interests of all parties as any substantial increase in the price of the sweetener ahead of the 2024 general election would not only push up inflation but could also be a political brownie point for the Opposition to corner the government.

The mills said cost of steel and other metals have affected repair and maintenance, while cost of important chemicals such as sulphur and lime have gone up. Price of packing materials, especially jute bags and HDPE/PP bags have risen.

High cost of manpower and a significant increase in interest rates have affected term loans and working capital.

“Buying raw material at the highest price and selling finished product at the lowest price, which economy can sustain this?” wondered Praful Vithalani, chairman of All India Sugar Trade Association.