The government on Wednesday decided to keep unchanged the minimum price sugar mills pay to sugarcane growers at Rs 275 per quintal for the next marketing year starting October.
The decision to maintain the status quo in the Fair and Remunerative Price (FRP) of sugarcane for the 2019-20 marketing year (October-September) was taken in the meeting of the Cabinet Committee on Economic Affairs (CCEA) held here.
It is in line with the recommendation of the Commission of Agricultural Costs and Prices (CACP), a statutory body that advises the government on the pricing policy for major farm produce.
"The CACP's recommendation on sugarcane has been accepted by the government. ...This year also farmers will get Rs 275 per quintal for sugarcane," Information and Broadcasting Minister Prakash Javadekar told reporters briefing about the cabinet decisions.
The CCEA has approved the FRP price to be linked with the basic recovery of 10 per cent and a premium of Rs 2.75 per quintal will be given for every 0.1 per cent point increase in recovery rate.
Earlier, the FRP price was linked to a basic recovery rate of 9.5 per cent, subject to a premium of Rs 2.68 per quintal for every 0.1 per cent increase in recovery rate.
"The approval will ensure a guaranteed price to cane growers. Determination of FRP will be in the interest of sugarcane growers keeping in view their entitlement to a fair and remunerative price for their produce," the government said in a separate statement.
The FRP, which is determined under Sugarcane (Control) Order, 1966, is the minimum price that sugar mills have to pay to sugarcane farmers.
Welcoming the decision, Indian Sugar Mills Association (ISMA) Director General Abinash Verma said it was on "expected lines". The FRP has increased quite steeply in the last few years and sugarcane has outstripped the returns from other crops.
"This decision will restore some balance amongst the crops. It will benefit sugar mills because 70 to 75 per cent of the cost of producing sugar is only on account of sugarcane. At the same time, it will help keep cane price arrears of farmers under control," it said in a separate statement.
Since the average productivity of sugarcane has increased quite steeply in the last several years, ISMA said, "The farmers will continue to get better revenue realization from the same plot of land. Therefore, through this decision, the government has taken care of the interests of farmers and millers at the same time."
Major sugarcane producing states such as Uttar Pradesh, Punjab and Haryana fix their own sugarcane price called 'state advisory prices' (SAPs), which are usually higher than the Centre's FRP.
India's sugar output is likely to be 32.95 million tonne in the current 2018-19 marketing year (October-September), as against the annual domestic demand of 26 million tonnes.
According to ISMA, the opening stock of sugar is expected to be at an all-time high of around 14.5 million tonnes on October 1, 2019, as against the normative requirement of around 5 million tonnes.
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