The Hindu Business Line : Cane SMP to be fixed at 9 pc base recovery

IN a big boost to the sugar industry, the Government has decided to fix the Statutory Minimum Price (SMP) of sugarcane on a base recovery of 9 per cent, against the existing 8.5 per cent.

Further, factory-wise SMPs would be determined based on the `average' sugar recovery recorded by the mill for the preceding season and not the `peak' recovery, as is the case now.

The decisions, to be effective from the ensuing 2004-05 sugar season (October-September), were announced by the Union Food and Agriculture Minister, Mr Sharad Pawar, at the 45th Annual Meeting of the General Body of the National Federation of Cooperative Sugar Factories Ltd here today.

For the 2003-04 season, the Centre had announced a cane SMP of Rs 73 per quintal, linked to a 8.5 per cent base recovery. A factory recording a 10 per cent peak recovery in the previous would, thus, have coughed up Rs 85.88 per quintal. But in the new 9 per cent base recovery regime, the factory would have to pay only Rs 81.11 per quintal.

Further, since the average recovery during a full season is normally 0.4-0.5 percentage points below the peak level, the factory would actually end up paying just for a recovery of 9.5-9.6 per cent and not 10 per cent. That means an effective cane price of just around Rs 77 per quintal in the above case.

The other major announcement was halving the interest on loans from the Sugar Development Fund (SDF) to 4.25 per cent.

More Stories on : Agricultural Policy | Sugar

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