New Delhi: Farmer groups on Friday rejected the government’s slightly more than 17% hike in the benchmark price of sugarcane mills are mandated to pay them during the marketing year starting October as “too little”, while the industry renewed demand for linking the price of cane to that of sugar.
The Cabinet Committee on Economic Affairs (CCEA) on Thursday evening decided to increase the fair and remunerative price of sugarcane to R170 per quintal, compared with R145 a quintal in 2011-12.
FE was the first to report late last year that the Commission for Agricultural Costs and Prices (CACP), which recommends minimum prices for key crops to the government, had mooted the more than 17% hike in the fair and remunerative price (FRP) of cane, factoring in the rise in the cost of production and some other risk factors.
The FRP is linked to a basic recovery rate of 9.5%, subject to a premium of R1.46 for every 0.1 percentage point rise in the recovery rate above 9.5%. The recovery rate refers to the quantity of sugar that is produced from cane after crushing. The country expects to produce around 25 million tonne of sugar in 2012-13, while its annual consumption is pegged at around 22 million tonne.
Although the Centre fixes the FRP, a state is free to determine the minimum price at which sugar mills within its boundary must purchase cane. The cane price set by an individual state, however, is much higher than the FRP as the ruling party often uses the pricing policy as a tool to woo farmers who form the majority of vote bases.
“What is the basis of this FRP calculation when the state advisory price of cane is R250 per quintal in Uttar Pradesh in 2011-12? Moreover, when the cost of production has gone up by at least 30%, what is the justification of raising the FRP by just 17%?,” asked Krishan Bir Chaudhary, the president of Bharatiya Krishak Samaj. He said that the recovery rate of cane has also been raised to 9.5% from 9%, which would effectively reduce the earnings of farmers, adding that at least R300 per quintal should be provided to the farmers.
Farmer groups have apprehended that “paltry” hike in the sugarcane FRP would hurt cane planting. The sugar industry, on the other hand, says the input costs of sugar will go up although prices of the sweetener have remained subdued for most part of the past one year due to adequate supplies.
“Now that the FRP has been increased by more than 17% for 2012-13, we believe the government needs to accept the fact that the input costs of sugar will go up by the same percentage. We expect even higher cane purchase prices fixed by states, going by past records,” said Indian Sugar Mills Association director general Abinash Verma.
He said the government needs to link the price of cane to that of sugar so that farmers would get payment for their produce regularly without piling up of any arrears and liquidity in mills would also improve.
Sugarcane area has risen by around 4% to 5.28 million hectares so far this summer from the usual average.
The CCEA also approved a proposal to defreeze the benchmark import value of refined oil RBD palmolein from $484 per tonne and align it with the current international prices.
“As tariff value remained unchanged for about 6 years, though import duty on refined oil is 7.5%, the effective rate is only about 3.6% on current prices. In September, 2011, Indonesia the largest exporter of crude palm oil to India increased export duty on CPO from 15% to 16.5% and reduced export duty on refined palmolein from 15% to 8%, which further affected the domestic refining industry,” an official statement said on Thursday.