 "sugarcane")
To better support the agricultural sector, the government of India has approved the ‘Fair and Remunerative Price’ (FRP) of sugarcane payable by sugar mills to sugarcane farmers for the upcoming sugar season 2023-24.
This decision was taken by the Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi.
The determination of the FRP is based on the recommendations of the Commission for Agricultural Costs and Prices (CACP) and after consultations with state governments and other stakeholders. The government has been announcing the FRP since the sugar season 2013-14, with the aim of supporting farmers in the sugarcane industry.
Under the approved scheme, the highest-ever FRP of Rs 315 per quintal has been set for sugarcane farmers. This price will be applicable for a basic recovery rate of 10.25 per cent. Additionally, a premium of Rs.3.07 per quintal will be provided for every 0.1 per cent increase in recovery above 10.25 per cent. Conversely, the FRP will be reduced by Rs 3.07 per quintal for every 0.1 per cent decrease in recovery.
The centre has also decided that there will be no deduction in case of sugar mills where the recovery rate falls below 9.5 per cent. These farmers will also receive Rs 291.97 per quintal for their sugarcane in the upcoming sugar season 2023-24, compared to Rs 282.12 per quintal in the current sugar season 2022-23.
The cost of production for sugarcane in the sugar season 2023-24 has been estimated at Rs 157 per quintal. The approved FRP of Rs 315 per quintal for a recovery rate of 10.25 per cent is an increase of 100.6 per cent over the production cost. The FRP for the sugar season 2023-24 is also 3.28 per cent higher compared to the current sugar season 2022-23.
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This sector plays a crucial role in the livelihoods of approximately 50 million sugarcane farmers, their dependents, around 500,000 workers who are directly employed in sugar mills, as well as those involved in ancillary activities such as farm labour and transportation.
The approved FRP will be applicable for the purchase of sugarcane from farmers by sugar mills from October 1, 2023.
Background
In the current sugar season 2022-23, sugar mills purchased approximately 335.3 million tons of sugarcane, worth more than Rs 1.11 trillion. This procurement stands as the second-highest, following the procurement of paddy crops at the minimum support price. The government's pro-farmer measures ensure that sugarcane farmers timely receive their dues.
Over the past five years, the growth of the ethanol sector as a biofuel has been beneficial for sugarcane farmers and the sugar industry. Diversion of sugarcane/sugar to ethanol has resulted in improved financial positions for sugar mills, faster payments, reduced working capital requirements, and reduced surplus sugar inventory. These factors enable mills to make timely payments to farmers for their cane dues. In the year 2021-22 alone, sugar mills and distilleries generated approximately Rs 20,500 crore in revenue from the sale of ethanol to oil marketing companies (OMCs), which facilitated the clearance of cane dues.
The target is to divert over six million metric tons of excess sugar to ethanol by 2025, addressing the issue of high sugar inventories, improving liquidity for mills, ensuring timely payment of cane dues, and generating employment opportunities in rural areas. The use of ethanol in petrol will contribute to the reduction of reduction and improve the overall air quality.
