The Hindu Business Line : Farm panel for hiking minimum cane price

Support call
CACP for revision after hike in MSP for wheat, paddy.
Admits sugar mills not in position to pay high support prices.
Says revised rates will not have impact on consumers.

Mamuni Das

New Delhi, March 31 The Commission for Agricultural Costs and Prices (CACP) has recommended a substantial upward revision of statutory minimum price (SMP) for sugarcane growers at Rs 125 per quintal of cane, apart from a bonus of Rs 30 per quintal to be paid by the Centre, for a base recovery of nine per cent in the 2008-09 season.

It has also suggested a premium of Rs 1.40 for every 0.1 percentage point increase over the base recovery in a supplementary report submitted to the Ministry last week.

This is against a much lower SMP of Rs 81.18 per quintal for a basic nine per cent recovery, subject to a premium of 90 paise for every 0.1 percentage increase in recovery above that level for 2008-09, which was fixed by the Government on March 20. The Cabinet Committee on Economic Affairs’ decision was based on a CACP recommendation of August 13, 2007 on the issue.

Wheat, paddy MSPs

However, CACP revised its recommendation in the backdrop of substantial hikes in minimum support prices (MSPs) of wheat and paddy brought about recently, which made these crops almost six times more profitable than sugarcane for farmers in 2008.

In this backdrop, CACP fears massive reduction in cultivation and production of sugarcane.

Following representations from farmers, CACP had a stakeholder meeting of State Governments, sugar mills and sugarcane growers and farmers recently.

Call for bonus

At the existing level of price and yield, sugarcane’s SMP has to be raised to Rs 175 per quintal to restore the inter crop parity levels of last year. Admitting that sugar mills are not in a position to pay such high MSPs, CACP has recommended Central Government should fork out a bonus of Rs 30 per quintal of sugarcane.

At an all-India average recovery rate of 10.22 per cent (2005-06), the committee has recommended SMP of Rs 142 per quintal, and Rs 30 bonus.

CACP has also said that there would not be any major impact on consumers, as expenditure on sugar hardly accounts for 2.4 per cent of total consumer expenditure in rural India and 1.5 per cent in urban India. Moreover, the wholesale price index of sugar has declined in the last few years.

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