The government on Thursday cleared a proposal to raise the Fair and Remunerative Price (FRP) of sugarcane by Rs 10 a quintal, to Rs 220, for the 2014-15 marketing year, starting October.

Approval came from the Cabinet Committee on Economic Affairs. The FRP is the minimum mills must pay cane farmers. The proposal, from the food ministry, was in line with a recommendation from the Commission for Agricultural Costs and Prices.

State governments are also free to fix their own, State Advised Price; millers can also offer any price above the FRP. The latter is fixed after considering the margins for cane farmers, based on the cost of production and including the cost of transport.

The government estimates sugar output at 24.1 million tonnes for 2013-14, lower than the 25 mt in the previous year. India is the world's second largest producer of sugar, after Brazil. However, it is the globe’s biggest consumer. Annual domestic demand for sugar is estimated at 23 mt.