The government on Wednesday approved a 5% hike in fair and remunerative price (FRP) of sugarcane to be paid to farmers for the next season (Oct-Sept) to Rs 305/a quintal.
The Cabinet Committee on Economic Affairs (CCEA) approved the increase subject to base sugar recovery of 10.25%.
FRP fixed for the next season is 88.3% more than the cost of production, thus ensuring the government’s promise of paying 50% more than cost of production to farmers for which support prices are announced, a food ministry statement stated.
More than 360 million tonne (MT) of sugarcane is likely to be purchased by sugar mills in the next season, for which the total remittance to 50 million farmers will be more than Rs 1.2 trillion, the ministry stated.
The decision to increase FRP of sugarcane for the 2022-23 season is in line with the Commission for Agricultural Costs and Prices (CACP) recommendation.
The FRP for the just concluded 2021-22 season was at Rs 290/quintal at 10% recovery rate.
The FRP is linked to the basic recovery rate of sugar, which in effect is the ratio between sugar produced versus cane crushed, expressed as a percentage. The higher the recovery, the higher the FRP, and higher the sugar production.
The central government announces the FRP annually before the start of the sugarcane crushing season. It is the threshold price that mills are legally bound to pay to cane growers for the cane procured from them. However, many state governments, including Uttar Pradesh and Tamil Nadu, have their own cane pricing policy and they announce their sugarcane rates, which are known as state advised price or SAP, which is over and above the FRP.
The FRP is governed by the Sugarcane Control order, 1966 which mandates payment within 14 days of the date of delivery of the cane. Any delay in payment attracts an interest up to 15% per annum. The Act empowers the sugar commissioners to recover the unpaid FRP as dues in revenue recovery by attaching properties of the mills.
Sugarcane farmers of many states have been demanding a higher FRP for sugarcane in view of escalation in the cultivation cost. They have cited a steep hike in the cost of manures, fertilizers, pesticides besides in labour charges as reasons why FRP should be increased and brought at par with SAP-governed states such as Uttar Pradesh, the country’s largest sugarcane producing state, which had a SAP pf Rs 340/quintal for the normal variety for the 2021-22 season.
The country’s sugar production is estimated at 36 MT in the 2021-22 season. Sugar Mills Association (Isma) in its first projection has estimated sugar production at 35.5 MT in 2022-23.