The Cabinet Committee on Economic Affairs (CCEA) today approved a 32.74 per cent increase in the statutory minimum price (SMP) of sugarcane for the 2009-10 sugar season (October-September). The revised price is Rs 107.76 a quintal, Home Minister P Chidamabaram told reporters. Though sowing of the crop to be harvested in 2009-10 season is already complete, the move would benefit the ruling UPA government in the forthcoming Maharashtra Assembly elections, to be held later this year. The state, which is country’s largest sugar producing state, has millions of sugarcane farmers.
The increase is expected to encourage farmers to expand the acreage under sugarcane. Sugar output in the 2008-09 season has touched a three-year low of 14.7 million tonnes on lower sugarcane production as farmers shifted to more remunerative crops. The SMP is linked to a recovery of 9.5 per cent, which means that the grower gets a premium of Rs 1.13 for every 0.1 percentage point increase in recovery.
“This is a very good move and will have positive impact on sugarcane cultivation. An increased sugarcane output will ensure better capacity utilisation of sugar mills and related facilities like cogeneration and distillery,” said S L Jain, director general, Indian Sugar Mills Association.
The price, however, is not applicable to states like Uttar Pradesh, Bihar and Haryana where the state government set its own price — the state advised price (SAP) — which is usually higher than the SMP. For instance, the UP-based mills belonging to companies like Bajaj Hindusthan and Balrampur Chini paid a SAP of Rs 140-145 a quintal in the 2008-09 season (compared with the SMP of Rs 81.18 a quintal).
The SMP is relevant for states like Maharashtra, Karnataka and Tamil Nadu where companies like Renuka Sugars, EID Parry and Rajshree Sugars operate.
However, mills across the country will benefit from this increase as the price of levy sugar would now be calculated on the revised SMP. Industry sources said the price of levy sugar could go up from the current level of around Rs 1,300 a quintal to Rs 1,750 a quintal. Mills have to sell 10 per cent of the sugar they produce as levy to the government for the latter’s public distribution schemes.
Poultry development
The CCEA also approved the implementation of centrally-sponsored scheme on poultry development from third year of Eleventh Five-Year Plan, i.e., 2009-2010, with a total outlay of Rs 150 crore. The scheme combines one component of existing scheme (assistance to state poultry farms) and has two new components, namely rural backyard poultry development and poultry estates. The rural background poultry scheme is expected to assist around 385,000 BPL beneficiary families.
The CCEA has also approved a scheme worth Rs 454.72 crore to strengthen the agricultural research institutes. “The idea here would be to develop high yielding variety seeds in cereals, pulses, oilseeds, fruit and vegetables,” Chidambaram said.
The CCEA gave approval for amendments to the New Pricing Scheme III for indigenous urea units. It has been decided that the reduction in the fixed cost of urea units in the country due to the group averaging principle adopted under the New Pricing Scheme (NPS) will be restricted to 10 per cent of the normated fixed cost as computed under the pricing regime. The limitation on reduction of fixed cost will be applicable from April 2009 to April 2010. “This will cost the government a maximum of Rs 286 crore, of which Rs 166 crore will go to Madras Fertilisers,” Chidambaram said.
The Cabinet also gave its approval for constituting a Tribunal under Inter-State River Water Disputes Act, 1956, on Vansadhara Water Disputes. The tribunal will be headed by a chairman and two other members nominated by the chief justice of India from among the persons serving as a Supreme Court or High Court judge at the time of such nomination.
