The Fair and Remunerative Price (FRP), the minimum price that sugarcane farmers are legally guaranteed, was at Rs 170 per quintal in the 2012-13 marketing year (October-September).
"The Cabinet Committee on Economic Affairs (CCEA) has approved sugarcane FRP for 2013-14 at Rs 210 per quintal. This is an increase of Rs 40 per quintal from the last year," Food Minister K V Thomas told reporters after the meeting.
The CCEA has approved the proposal of the Food Ministry, which was in line with the recommendation of the Commission for Agricultural Costs and Prices (CACP) that suggested Rs 40 increase in the FRP at Rs 210 per quintal for 2013-14.
The CACP is a statutory body and advises the government on the pricing policy for major farm produce.
The FRP is the sugarcane price fixed by the Centre but there are some states like Uttar Pradesh and Tamil Nadu which announce their own rate called state advisory price (SAP). The SAP is much more than the FRP.
The 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. The recovery rate is the quantity of sugar that is produced from the crushed cane.
Separately, Thomas said the sugar production forecast for the ongoing 2012-13 marketing year has been revised upward to 24 million tonnes from 23.5 million tonnes.
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"Earlier, we had estimated sugar output for 2012-13 at 23.5 million tonnes. Now, this has been revised to 24 million tonnes, whereas the industry body ISMA estimated 24.2 million tonnes," the minister told PTI.
This year's production is expected to slightly lower than 26 million tonnes achieved in 2011-12 but sufficient to meet the domestic demand of 22 million tonnes, he added.