Cane price gets bittersweet response

The Centre has raised the fair and remunerative price (FRP) for sugar cane for the next season to Rs. 275 a quintal at a 10% recovery rate. This is the minimum price that mills must pay farmers from October. It represents an effective increase of a little over Rs. 6.50 a quintal from the current price.

The decision was approved by the Cabinet Committee on Economic Affairs at its meeting chaired by Prime Minister Narendra Modi on Wednesday.

Currently, the FRP is set at Rs. 255 per quintal at a 9.5% recovery rate. With farmers increasingly switching to higher sugar-yielding cane varieties, the new FRP will now be linked to a 10% recovery rate.

Speaking to presspersons after the Cabinet meeting, Food Minister Ram Vilas Paswan said the Centre had kept its promise to farmers to give them a return of at least 50% over their costs.

“The production cost is Rs. 155 a quintal. Thus, the FRP is higher than costs by more than 77%,” he said.

However, V.M. Singh, convener of the Rashtriya Kisan Mazdoor Sangathan, which represents cane farmers, says the increase is minimal.

‘Shameful hike’

“A Rs. 6.50 hike is shameful, especially when electricity, pesticide, fertilizer and labour costs have all gone up over the last year,” he told
The Hindu

He pointed out that most northern States set their own much higher minimum prices for cane; in Uttar Pradesh this year, the price is set at Rs. 325 per quintal.

“It is the farmers in Andhra Pradesh, Tamil Nadu, Gujarat, and Maharashtra to a certain extent, who will suffer from this minimal hike,” he said.

‘Unaffordable FRP’

Mill owners, on the other hand, say the current FRP is “unaffordable”.

“The increased FRP for next season will be more unaffordable for the sugar mills to pay to the farmers, unless concrete and focussed steps are taken to help improve ex-mill sugar prices to at least Rs. 35 a kg,” said Abinash Verma, general secretary of the Indian Sugar Mills Association. He estimated that next season’s payment will amount to Rs. 97,000 crore.

The recovery rate for sugar represents the amount of sugar that can be extracted from cane; thus, if 10 kg of sugar is produced from 100 kg of cane, it has a 10% recovery rate.

Currently, the FRP is Rs. 255 a quintal at a 9.5% recovery rate. For the next season, the FRP with a 9.5% recovery rate is set at Rs. 261.25; an increase of Rs. 6.25. However, with farmers increasingly switching to higher sugar-yielding cane varieties, the main FRP for next season — Rs. 275 — will now be linked to a 10% recovery rate. In the current season, farmers selling cane with a 10% recovery rate were entitled to an effective FRP of Rs. 268.42.

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