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The Commission for Agricultural Costs and Prices (CACP) has recommended an increase of Rs 10 a quintal in the Fair and Remunerative Price (FRP) of sugarcane for the 2015-16 (October-September) season.
FRP for the 2014-15 season was fixed at Rs 220 a quintal.
A decision on the price will be taken by the Cabinet.
The CACP-recommended price for the 2015-16 season is almost Rs 50-60 a quintal less than the price fixed by the Uttar Pradesh government for the ongoing sugar season (2013-14).
In India, the Centre and state governments are free to determine the price mills pay to sugarcane farmers each year. In many cases, state governments follow the Centre-determined rate, but UP does not. This has lead to a confrontation between the 90-odd private sugar mills in the state and the government, leading to unpaid amount of over Rs 5,000 crore.
Mills have threatened to close their operations from October 2014, unless the state government aligns the sugarcane price with the final sale price of the by-products, which includes sugar and bagasse, as suggested by a high-level committee constituted under the chairmanship of former head of the Prime Minister's Economic Advisory Council (PMEAC), C Rangarajan.
Some officials from the sugar industry said any rate that is significantly higher than the current FRP of Rs 220 a quintal will be difficult to pay as the arrears are mounting.
