CACP moots Rs 79.5/quintal minimum price for cane

He said the recommended price is set at 9 per cent base recovery of sugar from cane.

SMP for the current season""at Rs 74.5 per 100 kg ""is set at 8.5 per cent base recovery of sugar from cane, with an additional 88 paise to be paid to the farmers by the mills for every 0.1 per cent incremental recovery.

"Since the CACP has recommended a five rupee per 100 kilograms hike in sugarcane SMP to be accompanied by an increase in the base recovery at which the price is computed, the actual proposed per 100 kg increase is around 60 paise," the official said.

From the cane on which recovery of sugar is 9 per cent this season, the actual price paid to farmers is arrived at by multiplying 88 paise by five and adding to Rs 74.5. This works out to be Rs 78.90 per 100 kg.

The official said that based on the suggestions received from the governments of cane producing states and various sugar mills associations, a final decision on the SMP will be taken by the Union Cabinet.

On November 11 last year, the Cabinet had approved the hike in the base recovery for fixing sugarcane SMP for the 2005-06 season to 9 per cent from the current 8.5 per cent. But the actual price is yet to be fixed.

"The cane SMP for next season will be fixed at 9 per cent recovery has been agreed upon and only the price has to be decided," the official said.

He said that generally, the government does not deviate from the recommendation made by the CACP, since it makes the proposals on sound economic analysis of the costs of producing cane and the prevailing sugar market conditions.

Recovery of sugar from cane varies from region to region, month to month and mill to mill and depends on a number of factors including the weather and sowing conditions, age of cane at the time of crushing, and the technology used by the mill.

The official said that increase in base recovery to compute SMP is aimed at encouraging states to step up cane development activities and bring about improvements in crop sowing and cane crushing technology.

The importance of base recovery is that even if recovery of sugar from cane in certain mills is below the base level, the SMP fixed at that (base) level has to be nevertheless paid to the farmers.

On cane pricing, the official said that unless the farmers get remunerative price for their produce, acreage under cane would not rise. Under the Sugarcane Control Order, mills are bound to pay at least the SMP to sugarcane farmers.

He said that since the Supreme Court last year upheld the rights of state governments to fix their own state-advised cane prices or SAPs, this could enhance farm incomes. This is because SAPs are generally higher than price computed on recovery-linked SMP.