The central government on August 25 said that it had decided to increase the minimum price sugar mills pay to sugarcane growers by Rs 5 to Rs 290 per quintal for the next marketing year starting October.
The decision to increase the Fair and Remunerative Price (FRP) of sugarcane for the 2021-22 marketing year (October-September) was taken in the meeting of the Cabinet Committee on Economic Affairs.
The government fixed sugarcane FRP at Rs 290 per quintal for the current 2021-22 marketing year.
The government said the FRP of Rs 290 per quintal had been fixed for a basic recovery rate of 10 percent.
However, a premium of Rs 2.90 per quintal will be paid by sugar mills for every 0.1 percent increase above 10 percent in the recovery, it said.
Also, the government has made a provision for reduction in FRP by Rs 2.90 per quintal for every 0.1 percentage point decrease in recovery, in respect of those mills whose recovery is below 10 percent but above 9.5 percent.
However, for mills having recovery of 9.5 percent or below, the FRP is fixed at Rs 275.50 per quintal.
The decision to hike the FRP on sugarcane comes ahead of the Legislative Assembly elections in Uttar Pradesh and Punjab next year which are major sugarcane producing states.
The Ministry of Consumer Affairs, Food and Public Distribution Piyush Goyal at a media briefing said that the government has ensured that sugarcane farmers will get 87 percent returns on their total cost.
"Last year, about Rs 76,000 crore was to be paid to sugarcane farmers, out of that Rs 75,7000 crore has already been paid, leaving behind just Rs 142 crore to be paid," Goyal said.
He added that in 2020-21, Rs. 91,000 crore had to be paid, of which Rs. 86,000 crore has been paid.
The FRP in India has been fixed 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.
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.
On August 19, Punjab Chief Minister Amarinder Singh approved a Rs 15 per quintal hike in the SAP of all sugarcane varieties for the 2021-22 crushing season.
Earlier in 2021, there have been reports suggesting that sugarcane producers in the state of Karnataka have demanded an increase in the FRP for the crop commensurate with the cost of cultivation for 2021-22.
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