ISMA warns of sugar industry crisis if ethanol prices remain unchanged

The Indian Sugar Mills Association (ISMA) has expressed concern over a potential crisis in the sugar industry, warning that many sugar mills could face difficulties if ethanol prices are not revised soon.

Ethanol production has become a critical source of income for sugar mills, especially as sugar prices fluctuate.

Ethanol sales allow plants to diversify their revenue streams, providing a stable source of income that helps offset losses when sugar prices fall.

Ethanol has become increasingly important in recent months as sugar prices have fallen.

In an interview with CNBC-TV18, ISMA President Prabhakar Rao stressed the urgency of government intervention to ensure the stability of the sugar industry and support broader ethanol blending initiatives.

Rao noted that delays in the processing season are leading to a fall in sugar prices.

While the crushing season in key states like Maharashtra and Karnataka was expected to begin in mid-November, Rao suggested that the upcoming elections in Maharashtra could lead to further delays.

Average sugar prices, which were Rs 38/kg last year, have now dropped to around Rs 35-35.5/kg due to excessive stockpiling of sugar.

Despite the price decline of around ₹2/kg, the fair and remunerative price (FRP) of sugarcane has increased by 6%. This increase in production costs creates an additional financial burden on mills as they are forced to buy sugarcane at a fixed government price regardless of the market price of sugar.

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