Centre raises sugarcane FRP by Rs 10 a quintal for 2020-21 season

Govt estimates over Rs 93,000 crore may flow into hands of sugarcane farmers in 2020-21 based on estimated output

The Union Cabinet on Wednesday decided to increase the minimum price sugar mills pay to sugarcane growers, also known as Fair and Remunerative Price (FRP), by Rs 10 per quintal to Rs 285 for the next marketing year starting October 2020, according to an official statement.

The FRP is linked to a basic recovery rate of 10 per cent.

The recovery rate is the amount of sugar that sugarcane fetches and higher the quantum of sugar derived from the cane, greater the price it fetches in the market.

In respect of sugar mills that have a recovery of more than 10 per cent, the FRP will be increased by Rs 2.85 for every 0.1 per cent increase in recovery above 10 per cent, the food ministry clarified.

In the same manner, FRP will be reduced by Rs 2.85 for every 0.1 per cent decline in recovery below 10 per cent.

But, this will be limited only upto 9.5 per cent.  

For those sugar mills, which have a recovery of less than 9.5 percent for the 2020-21 season, the FRP has been fixed at Rs 270.75 per quintal. 

The food ministry also clarified that the cost of producing sugar (A2+FL) as estimated by the Commission for Agriculture Costs and Prices (CACP) for 2020-21 season was estimated at Rs 159 per quintal, therefore, the FRP of sugarcane for 10 per cent recovery fixed at Rs 285 per quintal is almost 80 per cent more than the cost.

“Keeping the estimated sugar production for 2020-21 season, the total remittance to the sugarcane farmers by sugar mills will be more than Rs 93,000 crore based on the current FRP,” the food ministry said.

Government feels that liking the FRP to a base recovery rate of 10 per cent will benefit more farmers as according to estimate, out of the more than 500 sugar mills that operate in the country, a significant number have a recovery rate of 10 per cent or more.

The FRP, which is determined under Sugarcane (Control) Order, 1966, is the minimum price that sugar mills have to pay to sugarcane farmers.

Major sugarcane producing states such as Uttar Pradesh, Punjab and Haryana fix their own sugarcane prices called 'state advisory prices' (SAPs), which are usually higher than the Centre's FRP.

The government estimates the country's total sugar production to be 28-29 million tonne in the current year ending next month, compared to 33.1 million tonnes during 2018-19 due to sharp fall in cane acreage in Maharashtra and Karnataka.