The current situation is similar to the 2018-19 season when cane arrears had reached ₹20,000 crore, forcing the government to increase the MSP and help mills export through an incentive to sugarcane farmers
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The Indian government may consider setting up a sugar/sugarcane development board after the private sugar millers’ body, ISMA, suggested the constitution of such a body to address the entire sector’s issues. The demand comes at a time when the sugar mills have started defaulting on cane payment to farmers, estimated at ₹2,000 crore in the first two months of the current season.
Since the cane payment default has come after many years and despite allowing export and diversion to ethanol, the government is likely to address first the long pending demand of the mills to raise the minimum selling price (MSP) of sugar as indicated by the Food Secretary on Thursday.
The government is actively considering a revision in the MSP for sugar and other relief measures, Food Secretary Sanjeev Chopra said.
In a month’s time
“They (ISMA) told us the problem regarding cane arrears will start from mid-January. We are conscious of that timeline and are working on it. In the next one month or so, we will come out with certain decisions that would assist the industry and also ensure timely payment to farmers,” Chopra told media on the sidelines of the annual general meeting of the Indian Sugar & Bio-energy Manufacturers Association (ISMA) in New Delhi.
The government is exploring all options — revision in MSP, allowing more exports beyond the current level of 1.5 million tonnes (mt), and higher ethanol allocation, he said.
Reacting to ISMA’s demand to set up a sugarcane development board, Chopra said that though he favours such an idea, since it pertains to Agriculture Ministry he will take up the issue once the proposal is received. There is a need to improve yield of sugarcane as well as recovery of sugar, he said.
Later, addressing the media, the outgoing President Gautam Goel demanded revising the MSP to the level of all India average cost of production, estimated at ₹41.66 per kg now. The sugar MSP has remained unchanged at ₹31 per kg since February 2019, even as every year the government is increasing the sugarcane price, at which mills are mandated to buy under law.
Exports poised to gather pace
Goel said the current arrears until November 30 pertain to only Maharashtra, whereas crushing in Uttar Pradesh has picked up only two weeks ago. Under the law, sugar mills are supposed to make payment to sugarcane farmers within 14 days after which it becomes arrears.
He also said that mills are facing a liquidity crisis owing to surplus stocks, high cost of production, lower ethanol allocation, fall in domestic prices and a global glut.
Chopra said that India’s sugar production is pegged at 34.3 mt for the 2025-26 season (October-September) on higher cane production as estimated by the Agriculture Ministry. Since ethanol allocation from sugarcane-based or sugar-based molasses has been only 28 per cent, about 3.4 mt of sugar will be diverted for ethanol.
On export, he said that while parity is currently an issue, it is expected to improve after Brazil’s sugar season ends next month, allowing mills to dispose of stocks profitably.
“We are conscious of the fact that surplus stocks should not build up. We are also aware that the next sugar season may even be better. So we need to ensure that stock build-up is prevented to the extent possible and sugarcane farmers get their dues in time,” he said.
2018-19 situation?
The newly elected ISMA president, Niraj Shirgaokar of Karnataka’s Ugar Sugar Mills, who assumes charge from December 20, said that mills would be able to absorb even if there is lower realisation from export, as the domestic market is key, where 95 per cent of the production is sold. He ruled out the possibility of stockpiling after an increase in MSP, saying the demand is not going to dip as retail prices may rise about ₹0.50-1 a kg maximum, buy will help check the slide in ex-mill rates. ISMA officials said that there is a fall of ₹2-2.50 per kg in this season from the peak rates realised by mills.
ISMA Director-General Deepak Ballani said that the current situation is similar to the 2018-19 season when cane arrears had reached ₹20,000 crore, forcing the government to increase the MSP and help mills export through an incentive to sugarcane farmers.
Published on December 18, 2025
