Sugar stocks turned bitter, trading in the red on February 22, as the government announced a hike in the fair and remunerative price (FRP) of sugarcane to Rs 340 a quintal from Rs 315 for the 2024-25 season.
This price is about 8 percent higher than the rate for the 2023-24 sugar season. The revised FRP will be applicable with effect from October 1, 2024.
At 9.20am, Balrampur Chini Mills was quoting Rs 377, down more than 1 percent, while EID Parry and Shree Renuka Sugars too traded down. Other losers included Dalmia Bharat Sugar, Dhampur Sugar Mills and Triveni Engineering.
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"With this approval, sugar mills will pay FRP of sugarcane at Rs 340/quintal at recovery of 10.25 percent. With each increase of recovery by 0.1 percent, farmers will get additional price of Rs 3.32 while the same amount will be deducted on reduction of recovery by 0.1 percent," the Centre said in a statement.
While for other crops the government fixes the MSP, cane growers are offered FRP. The mechanism is governed by the Sugarcane (Control) Order of 1966. The Commission of Agricultural Costs and Prices (CACP) annually formulates recommendations for FRP, encompassing various agricultural commodities, including sugarcane. The government evaluates these recommendations before they are put in place.
The overall sugar production in 2023-24 is expected to see a downslide because of lower rainfall, which has led to lesser sugarcane plantation this year, said the industry.
“The overall sugar production this year is expected to be at a downslide than last year because of less rainfall which has led to lesser sugarcane plantations. However, the lower sugar production this year is not worrisome as the difference may not be huge as compared to last year, as the crushing season is ongoing and still not over,” All India Sugar Trade Association (AISTA) Chairman Praful Vithalani told Moneycontrol.
Also Read | Sugar production likely to be on a downslide in 2023-24: Industry
AISTA estimates sugar production at 316 lakh tonnes this year as compared to 329 lakh tonnes in 2022-23.
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