The government on Wednesday hiked the fair price for sugarcane by Rs 25 per quintal to benefit five crore farmers across cane producing states.
The fair and remunerative price (FRP), which is the minimum price sugar mills have to pay to farmers, has been increased from Rs 230 per quintal to Rs 255 for 2017-18 seasons that kicks-in from October.
The hike, approved by the Union Cabinet Committee on Economic Affairs (CCEA), is the first this year.
The increase is also likely to result in states like Uttar Pradesh, which do not follow the Centre-announced FRP, raising their own advisory prices.
Major sugarcane producing states like Uttar Pradesh, Punjab and Haryana fix their own sugarcane price called ‘state advisory prices’ (SAP), which is usually higher than the Centre’s FRP.
Uttar Pradesh has fixed the SAP for the current 2016-17 year at Rs 305 and Rs 315 per quintal for two varieties of sugarcane.
Following the revision in FRP, the two-month-old Yogi Adityanath government, which is battling problems on law and order front, may also announce higher rates to benefit UP farmers.
Yogi Adityanath government’s first decision after coming to power was to waive loans of farmers.
The FRP, which is the minimum price that mills have to pay to sugarcane farmers, was kept unchanged at Rs 230 per quintal for the current 2016-17 year (October-September).
“Sugar mills situation has improved. For 2017-18, sugarcane FRP of Rs 255 per quintal has been approved, which is 10.6 per cent higher than the current level,” Finance Minister Arun Jaitley told reporters after the meeting.
The move is a reflection of the government’s pro-farmer initiatives, keeping in mind the interest of sugarcane farmers and importance of the sugar industry, the statement said.
The FRP price is 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 point increase in recovery rate.
The FRP has been fixed on the basis of recommendations of the Commission for Agricultural Costs and Prices (CACP), a statutory body that advises the government on the pricing policy for major farm produce.
Higher rate has been fixed for 2017-18 taking into account the rise in cost of production and millers’ capacity to pay the rate in view of better sugar prices.
Sugar prices have increased this year due to estimated fall in production of sweetener at about 20 million tonnes in 2016-17 season from 25 million tonnes in the previous year.
Asked about some states fixing higher price than FRP, Jaitley said that this situation continues as the matter is pending in the Supreme Court.
Sugarcane production in the current year declined by over 12 per cent to 306.03 million tonnes due to drought in key growing states Maharasthra and Karnataka.
However, the prospects in 2017-18 seem to be bright as the Met Department has forecast normal monsoon.