The Cabinet Committee on Economic Affairs (CCEA) is likely to approve tomorrow a Rs 25 per quintal hike in the fair and remunerative price (FRP) for sugarcane to Rs 255 for 2017-18 season beginning October.
The sugarcane FRP for the ongoing 2016-17 season has been kept unchanged at Rs 230 per quintal.
The FRP is the minimum price that sugarcane farmers are legally guaranteed. However, state governments are free to fix their own state advised price (SAP) and millers can offer any price above the FRP.
According to sources, the food ministry has proposed a sugarcane FRP of Rs 255 per quintal for the 2017-18 season and it will be linked to a basic recovery rate of 9.5 per cent.
The ministry has recommended the same rate suggested by the Commission for Agricultural Costs and Prices (CACP), a statutory body that advises the government on the pricing policy for major farm produce.
The hike has been recommended taking into account the rising cost of production and millers' capacity to pay the rate in view of better sugar prices.
Sugarcane output in the current year declined by over 12 per cent to 306.03 million tonnes due to drought in key growing states Maharasthra and Karnataka. However, the prospects in 2017-18 seem to be bright as the Met Deparment has forecast normal monsoon.