Fair and Remunerative Price (FRP) is the minimum price that factories have to pay to sugarcane growers
New Delhi:
The center on Wednesday raised the minimum price mills must pay to sugarcane growers by Rs 5 per quintal to Rs 290 per quintal for the 2021-22 marketing year, but ruled out an immediate increase in the selling price of sugar. The decision to increase the Fair and Remunerative Price (FRP) of sugar cane for the 2021-2022 marketing year (October-September) was taken at the Cabinet Committee on Economic Affairs (CCEA) meeting.
The government had set sugar cane FRP at Rs 285 per quintal for the current 2020-21 marketing year.
Food and Consumer Affairs Minister Piyush Goyal briefed the media after the cabinet meeting and said the FRP has been raised to Rs 290 per quintal for a base recovery rate of 10 percent. He said a premium of Rs 2.90 per quint will be provided for every 0.1 percent increase in recovery above 10 percent.
There will be a reduction in FRP of Rs 2.90/quintal for every 0.1 percent decrease in recovery.
To protect farmers’ interests, Mr Goyal said the government has decided that there will be no deductions when the recovery is below 9.5 percent.
“Such farmers will get Rs 275.50 per quintal for sugar cane in the coming 2021-22 sugar season instead of Rs 270.75 per quintal in the current 2020-21 sugar season,” the minister said.
The production cost of sugar cane for the 2021-22 sugar season is Rs 155 per quintal. The FRP of Rs 290 per quint at a recovery rate of 10 percent is 87 percent higher than the cost of production, he said, adding that sugarcane cultivation is more rewarding than other crops.
The decision will benefit about 5 crore sugarcane farmers and their families, as well as about 5 lakh workers who work in sugar mills and related ancillary activities.
When asked whether the government will raise the minimum selling price (MSP) of sugar if FRP is raised, Mr Goyal said: “Not necessarily”.
He said the government is giving a lot of support to increase sugar exports and ethanol production.
“Given all these factors, we see no reason at this point to increase the (sugar) selling price,” he said, adding that sugar prices in the domestic market have remained stable.
He also said the government has struck a “delicate balance” between the interests of farmers, consumers and industry.
The center sets MSP for sugar, the floor price below which factories cannot sell the sweetener on the market. The current MSP is Rs 31 per kg.
Mr Goyal noted that sugar recovery has improved as farmers use modern technology and new farming practices
Speaking of sugar exports, the minister said the sugar factories have contracted for the export of 70 lakh tons in the current 2020-21 marketing year, of which 55 lakh tons have already been shipped, and the remaining 15 lakh tons are in the pipeline.
Mr Goyal said the government has provided financial support to factories to increase exports.
“To make sure farmers get the cane payments on time, the government promoted sugar exports,” he said.
On ethanol, Mr Goyal said that the use of ethanol for blending into petrol has increased over the years.
In the past three sugar seasons, a turnover of approximately Rs 22,000 crore was generated by sugar mills/distilleries from the sale of ethanol to oil marketing companies (OMCs).
In the current 2020-21 sugar season, a turnover of about Rs 15,000 crore is generated by sugar mills from the sale of ethanol to OMCs at 8.5 percent.
The minister said the blending of ethanol into gasoline will rise to 20 percent from current levels over the next three years.
According to Mr Goyal, ethanol revenue will increase to Rs 40,000 crore per year from current Rs 15,000 crore so that factories pay farmers on time.
In the previous 2019-20 sugar season, about Rs 75,845 crores in cane was owed, of which Rs 75,703 crore has been paid and only Rs 142 crore arrears are pending, according to an official statement.
In the current 2020-21 sugar sales season, farmers have already been paid a cane tax of Rs 90,959 crores while Rs 86,238 crores in cane duties have been paid.
The increase in exports and diversion of sugar cane to ethanol ensures timely payment of the sugar cane price to farmers, the minister said, and added sugar cane growers now do not have to wait long to get payment from factories.
Mr Goyal also commended the government of Uttar Pradesh for clearing all dues from sugar cane farmers for the 2017-18, 2018-19 and 2019-20 marketing seasons.
He went on to say that dues for the current 2020-21 sales season will be settled soon.
