The government today hiked the fair and remunerative price (FRP) of sugarcane by seven per cent at Rs 139.12 per quintal for the 2010-11 season.
The FRP of sugarcane for 2009-10 season was Rs 129.84 per quintal. Sugar season runs from October to September.
"The Cabinet Committee on Economic Affairs (CCEA)today approved determination of FRP of sugarcane for 2010-11 season at Rs 139.12 per quintal," an official statement said.
The decision was taken at a meeting of CCEA this morning.
FRP is the minimum price that sugarcane farmers are legally guaranteed. However, the sugar mills are free to offer any price above the FRP.
From the current season, the Centre has decided to fix FRP as the price to be paid by the sugar mills instead of the Statutory Minimum Price (SMP) earlier.
FRP is linked to a basic recovery rate of 9.5 per cent subject to a premium of Rs 1.46 for every 0.1 percentage point increase in recovery above 9.5 per cent. Recovery rate is the sugar produced from the crushed cane, the statement said.
The CCEA has fixed the FRP of sugarcane for 2010-11 season close to the recommended price of around Rs 140 a quintal by the Food Ministry.
In the current season, sugarcane farmers have received about Rs 250 a quintal due to shortage of the crop.
The FRP is fixed after taking into consideration the margins for sugarcane farmers on account of risk as well as profit on the cost of production of sugarcane, including the cost of transportation.
It includes a margin of nearly 45 per cent on account of profit and risk to the farmers on the all India adjusted average cost of production of sugarcane, including the cost of transportation to the mill gate.