The Narendra Modi Government is likely to consider a proposal to increase the minimum price per quintal of sugarcane by Rs 20 taking it to Rs 275 that sugar mills will be required to pay to the cane growers for the next marketing year starting October.
Besides raising the Fair and Remunerative Price (FRP) for the farmers, the Prime Minister’s Office has already asked the Food and Consumer Affairs Ministry to raise the minimum selling price of sugar fixed at Rs 29 per kg to give some relief to the sugar mills.
Sources said the Cabinet Committee on Economic Affairs (CCEA) is likely to consider a proposal to fix the FRP of sugarcane for the 2018-19 marketing year. While the Prime Minister has an eye on the 2019 lok Sabha elections to woo the farmers with better price for the sugarcane, fears have been expressed that it will make the industry burdened with unsold stocks sick. The Government recently announced a sharp increase in the minimum support price (MSP) of kharif crops including paddy.
The Commission for Agricultural Costs and Prices (CACP) had recommended Rs 20 per quintal hike in the FRP of sugarcane at Rs 275 per quintal for next season. The FRP, which is the minimum price that sugar mills have to pay to sugarcane farmers, is Rs 255 per quintal for the 2017-18.
The CACP is a statutory body that advises the Government on the pricing policy for major farm produce. Usually, the Government accepts the CACP recommendations. At present, the FRP price is linked to a basic recovery rate of 9.5 per cent, subject to a premium of Rs 2.68 per quintal for every 0.1 per cent point increase in recovery rate.
Sources said the basic recovery rate could be increased to 10 per cent. The proposed increase is also likely to result in States like Uttar Pradesh that do not follow the centrally-announced FRP raising their own advisory prices.
The FRP set by the Centre is the minimum guaranteed price at which the mills in Maharashtra, Gujarat, Karnataka, Madhya Pradesh and Andhra Pradesh pay to the farmers, while the farmers in the key growing States of Uttar Pradesh, Punjab, Haryana, Tamil Nadu and Uttarakhand get the state advised price (SAP) fixed by the state governments which is invariably higher than Centre’s FRP.
Meanwhile, a group of ministers (GoM), headed by Assam Finance Minister Himanta Biswa Sarma, had recommended lowering of the GST on ethanol from 18 to 12 per cent but deferred the decision on imposing cess on sugar. While the food ministry had suggested imposition of cess up to Rs 3 per kg on sugar, the GoM ruled out any cess on sugar
but felt 1 per cent agriculture cess can be levied on the luxury goods to raise funds for the sugarcane growers.
India’s sugar production is estimated to rise by 10 per cent to touch a new record of 35.5 million tonnes in the next marketing year, starting October as cane output could rise on normal rain.
Sugar production in India, the world’s second largest producer after Brazil, is estimated to reach a record 32.25 million tonnes in the current 2017-18 marketing year (October-September).