February 28, 2025 – In a surprising turn of events for India’s sugarcane industry, there will be no hike in the Fair and Remunerative Price (FRP) for the upcoming sugar season, a decision that has sparked curiosity among farmers, millers, and market analysts alike. Abinash Verma, a prominent figure in the Indian Sugar Mills Association (ISMA), has stepped forward to address concerns, asserting that this move is unlikely to disrupt sugar prices or the broader market dynamics in the near term.
The FRP, the minimum price sugar mills are legally obligated to pay farmers for sugarcane, has been a critical factor in balancing the interests of growers and the sugar industry. For the 2024-25 sugar season, the FRP was set at ₹340 per quintal at a sugar recovery rate of 10.25%, marking an 8% increase from the previous season. This adjustment, announced a year ago, was hailed as a significant step to support sugarcane farmers amid rising production costs. However, with no further increase planned for the next cycle, questions have emerged about its potential ripple effects on the agricultural and industrial landscape.
Abinash Verma, speaking on behalf of ISMA, emphasized that the absence of an FRP hike does not spell trouble for the industry. “The current FRP remains competitive and sustainable for both farmers and millers,” he stated. “We’ve seen stability in sugar prices over the past year despite global fluctuations, and we expect this trend to hold steady.” His confidence stems from a combination of factors, including robust domestic sugar production, controlled inventory levels, and the growing role of ethanol production in offsetting costs for sugar mills.
India, one of the world’s largest sugar producers, has been navigating a delicate balance between ensuring farmer profitability and maintaining affordable sugar prices for consumers. The decision to hold the FRP steady comes at a time when the industry is grappling with surplus stocks and increasing operational costs. Some farmers had hoped for a modest hike to offset inflationary pressures, but Verma argues that the existing price structure is sufficient to sustain the ecosystem.
Market analysts have echoed Verma’s optimism, noting that sugar prices are more closely tied to supply-demand dynamics and export policies than incremental changes in FRP. The 2024-25 season saw a record production of over 31 million tonnes of sugar, bolstered by favorable monsoon conditions and improved agricultural practices. With domestic consumption hovering around 28.5 million tonnes, the surplus has kept prices in check. Additionally, the government’s ethanol blending program has provided mills with an alternative revenue stream, reducing their dependence on sugar sales alone.
“Ethanol production has been a game-changer,” Verma pointed out. “By diverting sugarcane to ethanol, mills can manage excess supply while ensuring timely payments to farmers.” This strategic shift has been a lifeline for the industry, especially as global sugar prices have faced volatility due to weather disruptions in key producing nations like Brazil. With ethanol prices holding firm and demand rising, the financial strain on mills is less pronounced than it might have been in previous years.
Farmers, however, remain divided on the issue. While some accept the logic of maintaining the status quo, others worry about the long-term implications. Rising costs of fertilizers, labor, and irrigation have squeezed margins for smaller growers, who argue that even a modest FRP increase could provide much-needed relief. In states like Uttar Pradesh and Maharashtra, where sugarcane is a cornerstone of the rural economy, grassroots voices are calling for a reassessment of the policy.
Despite these concerns, Verma remains unfazed, highlighting the industry’s resilience. “We’ve weathered bigger challenges before,” he said. “The focus now is on optimizing resources and ensuring stability across the value chain.” ISMA has also been lobbying for other measures, such as a revision in the minimum selling price (MSP) of sugar and relaxation of export restrictions, to further bolster the sector.
As the sugar season approaches, all eyes will be on how this decision plays out. For now, Abinash Verma and ISMA stand firm in their belief that no hike in the sugarcane FRP will not impact prices or destabilize the market. Whether this prediction holds true will depend on a delicate interplay of weather, policy, and global trends—factors that have long defined the fate of India’s sugar industry.
With the current date set at February 28, 2025, the industry braces for another year of challenges and opportunities, guided by the steady hand of its key stakeholders.
