n the current sugar season, about 2,976 lakh tonnes of sugarcane worth ₹91,000 crore were purchased by mills
Our BureauNew Delhi, August 25The Cabinet on Wednesday hiked fair and remunerative price (FRP) of sugarcane for the forthcoming sugar season by ₹5 per quintal to ₹290.
FRP would be for a basic recovery rate of 10 per cent and farmers would be get an extra ₹2.90 per quintal for every additional 0.1 per cent increase in recovery. Similarly, there would be ₹2.9 per quintal reduction in FRP for each 0.1 per cent decrease in recovery up to a recovery of 9.5 per cent.
However, the minimum FRP will be capped at ₹275.50 per quintal even if the recovery goes down beyond 9.5 per cent, said Piyush Goyal, the Minister for Commerce and Industry as well as Consumer Affairs, Food and Public Distribution during a briefing on Cabinet decisions. India’s sugar season runs from October 1 to September 30. Goyal said in the current sugar season, about 2,976 lakh tonnes (lt) of sugarcane worth ₹91,000 crore were purchased by sugar mills. Of this, over ₹85,000 crore has already been paid to farmers, he said. Keeping the expected increase in the production of sugarcane in the ensuing season 2021-22, about 3,088 lt of sugarcane is likely to be purchased by the mills and total remittance to sugarcane farmers will be about ₹1,00,000 crore, the Minister said.
Indian Sugar Mills Association (ISMA) welcomed the decision on FRP saying the industry will not feel over-burdened with the government’s decision. The current decision to increase FRP by 1.75 per cent is quite reasonable, ISMA Director-General Abinash Verma said.
Hike in sale price
However, he said the industry would expect the government to increase the Minimum Selling Price (MSP) of sugar, too, to ₹34.5-35 a kg. “It will be necessary to help sugar mills accommodate the higher cane price payment to farmers in the current as also the next season. MSP of sugar has remained static for over 30 months,” he said. But Goyal ruled out that possibility saying that sugar firms are being adequately compensated through other schemes.
With the hike in FRP, the cost of sugar production would go up by ₹50 a quintal, said Sabyasachi Majumdar, Senior Vice-President & Group Head, ICRA , in a statement. Majumdar said that the firming up of sugar prices to around ₹35/kg (ex-mill UP) during August 2021 (prevailed around ₹31.8-32.6/kg during April-July 2021) with onset of festival season and moderated domestic quota release for the month augur well for the sector.