NEW DELHI: A government panel may approve nearly a 25% hike in sugarcane prices that the mills have to pay to farmers in a season in which plantings are expected to be lower than that of last year's.

"There is less sugarcane planting in Maharashtra and Karnataka due to drought conditions and shortage of water. Sugarcane production in these states may drop in 2013-14. But in Uttar Pradesh, it's likely to be good," said Union Agriculture Minister Sharad Pawar. With this price hike, cane farmers would be legally entitled to get a fair and remunerative price (FRP) of Rs 210 a quintal in the sugar season starting October 2013 compared to Rs 170 in the 2012-13 marketing year.

The proposal, moved by the Union food ministry, is based on the recommendations of the Commission for Agricultural Costs and Prices (CACP) and it will be discussed by the CCEA on Thursday. The price is fixed after factoring in the rising cultivation costs, marketing costs and price risk.