The government on Wednesday approved a 4% hike in fair and remunerative price (FRP) of sugarcane to be paid to farmers by the mills for the 2025-26 sugar season (October-September) to Rs 355/quintal.
The approval by the Cabinet Committee on Economic Affairs (CCEA) is subject to base sugar recovery of 10.25%.
The CCEA also approved payment of a premium of Rs 3.46/quintal for each 0.1% increase in sugar recovery above 10.25% and reduction in FRP of Rs 3.46/quintal for every 0.1% decline in recovery.
However, the Government has stated that there shall not be any deduction in case of sugar mills where recovery is below 9.5%. “Such farmers will get Rs.329.05/quintal for sugarcane in the ensuing sugar season 2025-26,” according to an official note.
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.
FRP of sugarcane is fixed on the basis of cost of production of all the major sugarcane producing states.
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.
Deepak Ballani, director general, Indian Sugar Mills Association (ISMA) said revised FRP is projected to enhance the farmers’ earning by over Rs 20,000 crore taking the total to be paid for sugarcane to around Rs 1.2 lakh crore in the 2025-26 sugar season.
In the current sugar season (2024-25), out of cane dues payable of Rs 97,270 crore about Rs.85,094 crore have been paid to farmers by the companies so far which is 87% of total dues.
In the 2023-24 sugar season, out of cane dues payable of Rs 1.11 lakh crore, most dues have been paid to farmers so far.
“The sugar sector impacts the livelihood of about 5 crore sugarcane farmers and their dependents and around 5 lakh workers directly employed in sugar mills, apart from those employed in various ancillary activities including farm labour and transportation,” according to an official statement.
ISMA had earlier urged the government to increase the MSP of sugar from the current level of 31/kg to atleast 36-37/kg in line with the hike in the FRP. MSP has remained unchanged since 2018. “This policy alignment would enable sugar mills to improve their cash flows and liquidity, there by ensuring that farmers receive timely dues,” Ballani of ISMA said.
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.
According to ISMA, production of the sugar for the whole season is likely to be around 26.4 million tonne (MT), which excludes 3.5 MT allocated for the ethanol.
This is against the output of sweetener at 29.9 MT in 2023-24 season which excludes 2.1 MT of sugar that was diverted for biofuel production.
After restricting the sweetener exports in 2023-24 season, the government in January, 2025 had allowed the exports of one MT of sugar in the ongoing 2024-25 season, after taking into consideration domestic availability and diversion towards ethanol production.