Centre Hikes Sugar FRP Price To Rs 290 Per Quintal, No Change In Selling Price

Fair and Remunerative Price (FRP) is minimum price that mills have to pay to sugarcane growers
Fair and Remunerative Price (FRP) is minimum price that mills have to pay to sugarcane growers

The centre on Wednesday hiked the minimum price that mills have to pay to sugarcane growers by Rs 5 per quintal to Rs 290 a quintal for 2021-22 marketing year, but ruled out any immediate increase in the selling price of sugar. The decision to increase the Fair and Remunerative Price (FRP) of sugarcane for the 2021-22 marketing year (October-September) was taken at the meeting of the Cabinet Committee on Economic Affairs (CCEA).

The government had fixed sugarcane FRP at Rs 285 per quintal for the current 2020-21 marketing year.

Briefing the media after the Cabinet meeting, Food and Consumer Affairs Minister Piyush Goyal said the FRP has been increased to Rs 290 per quintal for a basic recovery rate of 10 per cent. He said a premium of Rs 2.90/quintal will be provided for each 0.1 per cent increase in recovery over and above 10 per cent.

There will be a reduction in FRP by Rs 2.90/quintal for every 0.1 per cent decrease in recovery.

To protect interest of farmers, Mr Goyal said the government has decided that there would be no deduction where recovery is below 9.5 per cent.

"Such farmers will get Rs 275.50 per quintal for sugarcane in ensuing sugar season 2021-22 in place of Rs 270.75 per quintal in current sugar season 2020-21," the minister said.

The cost of production of sugarcane for the sugar season 2021-22 is Rs 155 per quintal. The FRP of Rs 290 per quintal at a recovery rate of 10 per cent is higher by 87 per cent over production cost, he said, adding that sugar cane farming is more remunerative than other crops.

The decision will benefit around 5 crore sugarcane farmers and their dependents, as well as about 5 lakh workers employed in sugar mills and related ancillary activities.

When asked if the government will increase the minimum selling price (MSP) of sugar as FRP has been raised, Mr Goyal said, "Not necessarily".

He said the government is giving a lot of support to increase sugar exports and ethanol production.

"Considering all of these factors, we do not see any reason at the present moment for increasing the (sugar) selling price," he said, add added the sugar prices have remained stable in the domestic market.

He also said the government has ensured a "delicate balance" between the interest of farmers and consumers as well as of the industry.

The centre fixes sugar MSP, which is the floor price below which mills cannot sell the sweetener in the market. The current MSP is Rs 31 per kg.

Mr Goyal noted sugar content recovery has been improving as farmers are using modern technology and new agricultural practices

Talking about sugar exports, the minister said the sugar mills have contracted for export of 70 lakh tonnes in the current marketing year 2020-21, of which 55 lakh tonne have already been shipped, and the remaining 15 lakh tonne are in pipeline.

Mr Goyal said the government has been giving financial assistance to mills for increasing exports.

"To ensure that farmers get cane payment on time, the government was promoting sugar exports," he said.

On ethanol, Mr Goyal said the use of ethanol for blending in petrol has been increasing over the years.

In the past three sugar seasons, revenue of about Rs 22,000 crore was generated by sugar mills/ distilleries from the sale of ethanol to oil marketing companies (OMCs).

In the current sugar season 2020-21, revenue of about Rs 15,000 crore is being generated by sugar mills from the sale of ethanol to OMCs at 8.5 per cent.

The minister said ethanol blending in petrol will rise to 20 per cent in the next three years from the current level.

According to Mr Goyal, the revenue from ethanol will increase to Rs 40,000 crore per year from the current Rs 15,000 crore, ensuring that mills pay to farmers in time.

In the previous sugar season 2019-20, about Rs 75,845 crores cane dues were payable, out of which Rs 75,703 crore has been paid and only Rs 142 crore arrears are pending, as per an official statement.

In the current sugar marketing year 2020-21, out of cane dues payable of Rs 90,959 crores, Rs 86,238 crores cane dues have already been paid to farmers.

The increase in export and diversion of sugarcane to ethanol is ensuring timely cane price payments to farmers, the minister said, and added cane growers now do not have to wait for a long to get payment from mills.

Mr Goyal also lauded the Uttar Pradesh government for clearing all dues of sugar cane farmers for 2017-18, 2018-19, and 2019-20 marketing years.

He further said the dues for the current 2020-21 marketing year would be cleared soon.