Cane price hiked to Rs. 290 a quintal

An update on latest decision on cane price hike

 Cane price hiked to Rs. 290 a quintal

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• The story: Union govt. hiked the minimum price that mills have to pay to sugarcane growers, also known as the Fair and Remunerative Price (FRP), by Rs 5 per quintal to Rs 290 a quintal for 2021-22 (October-September) sugar season while ruling out any immediate commensurate increase in the sale price of sugar.
• Recovery rate: Just like in previous years, the Rs 290 a quintal FRP of sugarcane will be applicable on a basic recovery of 10 per cent. Over the basic recovery rate of 10 per cent a premium of Rs 2.90 per 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 per quintal for every 0.1 per cent decrease in recovery. That apart, there will be no deduction of FRP where recovery is below 9.5 per cent.

1. Recovery rate is the amount of sugar that sugarcane fetches and higher the quantum of sugar derived from sugarcane, greater the price it fetched in the market.
2. FRP as per the Sugarcane (Control) Order, 1966, is the minimum price that sugar mills have to pay to sugarcane farmers.

• Pricing logic: 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. The Commission for Agriculture Costs and Prices (CACP) estimated 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.
• What next: With the FRP increased, the industry would expect that the Government will increase the Minimum Selling Price (MSP) of sugar too. It will help sugar mills accommodate the higher cane price payment to farmers in the current as also the next season. MSP of sugar has remained static for over 30 months, even though the cane FRP was increased by Rs 10/quintal in 2020-21 sugar season. In the 2020-21 sugar marketing year, out of cane dues payable of Rs 90,959 crore, Rs 86,238 crore cane dues have already been paid to farmers, while only Rs 142 crore is pending from 2019-20 marketing year. (govt. claim)
  

#Sugar #CACP #Agriculture #Sugarcane #Farmers #FRP

 

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