The Cabinet Committee on Economic Affairs (CCEA) on Friday approved the fair and remunerative price (FRP) of sugarcane — payable by sugar mills for the 2015-16 season — to be fixed at R230 per quintal, as compared with R220 for the 2014-15 season.
As per the decision of the CCEA chaired by Prime Minister Narendra Modi, “the FRP (the minimum price that sugarcane farmers are legally guaranteed) will be linked to a basic recovery rate of 9.5%, subject to a premium of Rs 2.42 per quintal for every 0.1 percentage point increase in recovery above that level.”
The calculation of FRP takes into account the margins for sugarcane farmers on the basis of the production cost of sugarcane as well as the transportation cost. In this regard, the CCEA has given approval to the suggestion of the Commission for Agricultural Costs and Prices (CACP), a statutory body advising the government regarding pricing policy of major farm produce.
Many sugar-prducing states like the UP fix their own state advised price (SAP) for cane, over and above FRP fixed by the Centre, causing extra budren to millers.
Indian Sugar Mills Association had warned that since sugar prices are Rs 500-700 per quintal lower than the cost of sugar production, mills are facing huge challenges to be able to pay even the fair and remunerative price of Rs 220 per quintal set by the Centre for the 2014-15 season, which is 27% lower than the price of Rs 280 fixed by the Uttar Pradesh government for 2014-15. So cane arrears may exceed Rs 14,500 crore by March, 2015.
The union cabinet on Friday allowed private manufacturers of bio-diesel to sell the fuel directly to consumers in a bid to augment production and use of bio-diesel in the country. As per rules, bio-diesel along with petrol and diesel could only be retailed by state-owned oil firms or private firms with Rs 2000 crore investment in oil infrastructure. Bio-diesel has now been taken out of this regulation.
“As the price of diesel is already deregulated and determined by the market, there is no economic justification in preventing private bio-diesel manufacturers, their authorised dealers and JVs of OMCs authorised by the MoP&NG from selling bio-diesel directly to consumers subject to their product meeting prescribed BIS standards,” the government said in a statement.