Sugar stocks fall as government hikes cane procurement price

Shares of domestic sugar manufacturers – EID Parry, Balrampur Chini, Dalmia Bharat Sugar, Dhampur Sugar and Shree Renuka Sugar – are trading in the red.

This comes after the central government announced that the fair and remunerative price (FRP) for sugarcane will be hiked by 8% to ₹340 per quintal. The revised FRP will come into effect from 1 October 2024.

“At 107% higher than A2+FL cost of sugarcane, the new FRP will ensure prosperity of sugarcane farmers. It is noteworthy that India is already paying the highest price of sugarcane in the world and despite that (the) Government is ensuring the world’s cheapest sugar to domestic consumers of Bharat,” said the central government in a press release.

Experts state that this hike could impact the sugar mills’ profitability as the cost of raw material could increase.

Meanwhile, the sugar production in India – between October 2023 to 15 February 2024 – has fallen by around 2% to 22 million tonnes. The sugar production is expected to decline by 10% to 33 million tones in this current sugar marketing year (from October 2023 to September 2024), according to an industry body.

The industry body states that lower rainfall has led to lesser sugarcane plantations this year.