The government on Wednesday hiked the fair and remunerative price (FRP) of sugarcane paid to farmers by Rs 10/quintal to Rs 315/quintal for the 2023-24 season (October-September).
The Cabinet Committee on Economic Affairs (CCEA) approved the increase subject to base sugar recovery of 10.25%. It also approved payment of a premium of Rs 3.07/quintal for each 0.1% increase in sugar recovery above 10.25% and reduction in FRP of Rs 3.07/quintal for every 0.1% decline in recovery.
Stating that hike in FRP is justifiable as cost of production has gone up, Prakash P Naiknavare, Managing Director, National Federation of Co-operative Sugar Factories (NSF) demanded a rise in minimum selling price (MSP) of sugar as well. “MSP of sugar has remained unchanged at Rs 31/kg since 2028 despite FRP hiked in the last three years,” Naiknavare told FE.
The cost of production of sugarcane for the 2023-24 season is Rs.157/quintal and the FRP of Rs.315/quintal at a recovery rate of 10.25% is higher by 100.6% over production cost, according to an official note. The government has also decided that there shall not be any deduction in case of sugar mills where recovery is below 9.5%. Such farmers will get Rs.291.97/quintal for sugarcane in 2023-24 season in place of Rs.282.12/quintal in the current sugar season.
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 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.
Indian Sugar Mills Association had earlier urged the government to increase the MSP of sugar from the current level of Rs 31/kg to at least Rs 36-37/kg in commensurate with hike in the FRP of cane.
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.
In the current sugar season (2022-23), about 33.53 million tonne (MT) of sugarcane worth Rs.1.11 trillion was purchased by sugar mills, which is the second highest next to the procurement of paddy crop at minimum support price, according to the statement.
Retail inflation for sugar was 0.52% in March, 2023.
NSF which represents 262 cooperative sugar mills and nine state sugar federations in the country has estimated a decline of 9% in sugar production to 32.5 MT from the previous year’s output of 35.9 MT due to lower yield in Maharashtra and parts of Karnataka attributed to adverse weather conditions like excessive rainfall and lack of sunlight during August – October season of last year.
“The sugar sector is an important agro-based sector that impacts the livelihood of about 50 million sugarcane farmers and their dependents and around 0.5 million workers directly employed in sugar mills,” according to the official statement.