The government on Wednesday approved 8% hike in fair and remunerative price (FRP) of sugarcane to be paid to farmers for the 2024-25 season (October-September) to Rs 340/quintal. This is one of the steepest hike in FRP in recent years. Last year, the government had hiked FRB for sugarcane by only 3%.
The approval by the Cabinet Committee on Economic Affairs (CCEA) is subject to base sugar recovery of 10.25%.The decision to hike FRP comes at a time when a group of farmers from Punjab are demanding legal guarantees for all the crops covered under minimum support price (MSP).
Usually, the government announces the FPR of sugarcane in June. However, because of forthcoming elections the announcement has been advanced this time around. The CCEA cabinet also approved payment of a premium of 3.07/quintal for each 0.1% increase in sugar recovery above 10.25% and reduction in FRP of3.07/quintal for every 0.1% decline in recovery. The new FRP would be applicable for purchase of sugarcane from the farmers in the 2024-25 season (October-September) by sugar mills.
The FRP has been determined on the basis of recommendations of the Commission for Agricultural Costs and Prices (CACP) and after consultation with state governments and other stake-holders.
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.
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.
“This decision of central government is going to benefit more than 50 million sugarcane farmers (including family members) and lakhs of other persons involved in sugar sector,” according to an official note on Wednesday.
The Indian Sugar Mills Association (Isma) had earlier urged the government to increase the MSP of sugar from the current level of 31/kg to at least36-37/kg in line with the hike in the FRP. MSP has remained unchanged since 2018.
In June, 2018 the government had introduced the concept of MSP of sugar so that industry could get at least the minimum cost of production of sweetener so as to enable them to clear cane price dues of farmers.
Last month, ISMA had stated that the country’s sugar production in the 2023-24 season is likely to be higher than its earlier projection of 32.5 MT while domestic consumption would be around 28.5 MT.
The sugar output for 2022-23 season was 36.61 MT, which excludes diversion towards ethanol production. Retail inflation for sugar was 7.51% in January, 2024.