India's cabinet approved the minimum cane price to increase by 5.2%, sugar mills sugar must pay 305 rupees ($3.85) per 100 kg for cane in the season starting October 1, up from 290 rupees a year earlier, the government said in a statement on Wednesday.
India raises the minimum price of cane, also known as Fair and Remunerative Price, almost every year.
But the state of Uttar Pradesh, the country's largest sugarcane producer, invariably raises the floor price even higher due to its millions of sugarcane growers.
On Wednesday, the government also raised the base price recovery rate to 10.25% from 10% previously.
The Indian Sugar Mills Association, in a letter to the government on Wednesday, called for an increase in the minimum selling price, to offset higher cane prices, which have driven up production costs at sugar mills.
India, the world's largest producer and second largest exporter of sugar, last raised MSP sugar to 31,000 rupees per tonne in February 2019, and prices have not been revised since, although mills' production costs have jumped. to 36,000 to 37,000 rupees per tonne, ISMA said.
Sugar prices are currently trading between 32,000 and 34,000 rupees per tonne and the MSP needs to be increased to 36,000 to 37,000 rupees to ensure mills can make cane payments to farmers, ISMA said in the letter.
Sources: investing.com
