- Will sugar become expensive again?
- There is a huge demand from the government to increase the price of sugar
- What are the detailed reasons?
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The All India Sugar Traders Association also termed the government's sugarcane rate as 'fair and appropriate'. The demand comes as a committee probes the growing discontent among sugarcane farmers.
What are the demands made by AISTA?
The All India Sugar Trade Association AISTA made this demand through a presentation before a four-member committee headed by former NITI Aayog member Ramesh Chand. The committee was formed on October 13 to redress the grievances of the agitating sugarcane farmers mainly in Karnataka and Maharashtra.
The committee met sugarcane farmers in Bangalore on November 4 and later in Pune. A delegation of AISTA also participated in the meeting in Pune. AISTA President Prafulla Vitthalani said that the minimum selling price of sugar has remained unchanged since February 2019. It should be increased to at least Rs 4,200 per quintal to ensure that sugar mills do not sell sugar below the cost of production.
What is MSP?
MSP is the full form of Minimum Support Price (Minimum Support Price) which is called as 'Minimum Support Price' in Hindi. It is a form of financial guarantee given by the government to farmers and producers. You can think of it as a reference price, below which no product is allowed to be sold or bought in the market, so that the producers are protected against losses. A minimum base price for sugar is fixed for factories. According to this, no sugar factory or wholesaler can sell sugar in the market at less than Rs.31 per kg.
Impact of AISTA's demand on the market
If the government increases the MSP of sugar to Rs 42 per kg, the revenue of sugar mills will increase. Currently, with the MSP at Rs 31 per kg, factories have to sell sugar below their cost of production, which prevents them from making huge profits. Now, if this rate is increased to Rs 42 per kg, the selling price will directly increase by Rs 11 per kg.
As the cost of production remains the same, the sugar mills will get a direct profit of Rs 4-6 per kg on sugar. This will enable factories to pay farmers for their sugarcane faster and on time. But, this may increase the prices of sugar in the open market, making sugar and its products a little more expensive for the general public.
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