Govt increases sugarcane’s fair price by Rs. 25/quintal to Rs. 255

The Dollar Business Bureau 

The Cabinet has approved an increase in sugarcane’s fair and remunerative price (FRP) by Rs.25 a quintal to Rs.255 for the season 2017-18 starting from October.

In this regard, a decision was taken at the Cabinet Committee on Economic Affairs (CCEA) meeting in New Delhi on Wednesday.

The FRP is the lowest price that is legally guaranteed to the sugarcane farmers. On the other hand, the state governments can also set their own state-advised price (SAP) and the mill owners can offer a price more than the FRP.

“Sugar mills situation has improved. For 2017-18, sugarcane FRP of Rs.255 per quintal has been approved, which is 10.6% higher than the current level,” Finance Minister Arun Jaitley told journalists after the Cabinet meeting.

The sugarcane prices are associated with a basic recovery rate of 9.5%, which is subject to Rs.2.68/quintal premium for every 0.1% point rise in recovery beyond that level.

This is in sync with the suggestions given by the Commission for Agricultural Costs and Prices (CACP), an attached office of Agriculture Ministry that advises the Central government on the pricing of major agriculture produce.

However, the FRP of sugarcane for this year was kept unchanged at Rs.230/quintal.

The higher price has been set for 2017-18 after taking into account the increase in production cost and capacity of millers to pay the rate considering better prices for sugar.

Replying to a question whether some states can set higher prices than FRP, the Finance Minister said the situation remains as the issue is still pending in Supreme Court.

In the current year, sugarcane production dropped by more than 12% to 306.03 million tonnes on account of drought in major sugarcane growing states of Karnataka and Maharashtra.

However, the prospects of production seem to be bright in 2017-18 as the Met Department has predicted a normal monsoon.