In an another attempt to woo farmers ahead of the Lok Sabha polls, especially sugarcane growers, who are agitating for higher prices for their produce, the government on Wednesday approved the hike of minimum price sugar mills pay to cane growers by Rs 20 per quintal to Rs 275 per quintal for the 2018-19 season starting October.
The decision to increase the fair and remunerative price (FRP) was taken at the cabinet committee on economic affairs (CCEA) meeting. FRP, which is the minimum price that mills pay to sugarcane farmers, is Rs 255 per quintal for the 2017-18 marketing year.
After implementation of the new price, mills’ arrears towards cane farmers are expected to come down from the present Rs 16,000 crore. The Rs 8,000 crore sugar package, announced last month, had lowered arrears from Rs 22,000 crore.
On new sugar FRP, law minister Ravi Shankar Prasad said, “The government has taken several steps in the interest of sugarcane growers. The decision to increase FRP shows the government’s concern towards farmers.”
“The cost of sugar production is estimated to be Rs 155 per quintal against which we have decided to give an FRP of Rs 275 per quintal. This is 77.42 per cent higher than the cost of production. The total remuneration for sugarcane to farmers for 2018-19 is estimated to be Rs 83,000 crore,” he said after the cabinet meeting.
Earlier this month, the government had hiked the minimum support price (MSP) for 14 notified kharif crops for 2018-19, providing farmers profit of 50 per cent or more over the cost of production.
As per the estimates by the Indian Sugar Mills Association (Isma), total sugar production in the 2018-19 season is expected to be over 35.5 million tonnes.
Reacting the move, food minister Ram Vilas Paswan said the new FRP would allow recovery rate of 10 per cent for the 2018-19 marketing year. “This is 77.42 per cent higher than the cost of production of sugarcane, which is estimated to be Rs 155 per quintal. If the recovery rate is higher than 10 per cent then a premium of Rs 2.75 per quintal would be given for each 0.1 per cent increase in sugar recovery,” Paswan said at a separate briefing.
For recovery rate below 9.5 per cent, Paswan said farmers will get Rs 261.25 per quintal and this has been done to protect the interest of farmers.
At present, FRP is linked to a basic recovery rate of 9.5 per cent, subject to a premium of Rs 2.68 per quintal for every 0.1 per cent point increase in recovery rate. “FRP of sugarcane for 2018-19 has been linked to a basic recovery of 10 per cent because more than 255 mills have a recovery rate over 10 per cent,” said Paswan.