Sugar stocks turned sour at the bourses on Friday after the Cabinet Committee on Economic Affairs had late last night hiked the sugarcane prices by 17 per cent.
Hence, sugar mills have to pay Rs 170 a quintal to farmers for 2012-13.
Fair and Remunerative Price (FRP), the minimum price that sugarcane farmers are eligible to receive, for the ongoing marketing year now stands at Rs 145 per quintal.
Sugar companies’ stocks fell sharply led by Empee Sugars and Chemicals, which tumbled 4.89 per cent at noon on the BSE.
The losers include Sakthi Sugars (down 4.59 per cent), Dwarikesh Sugar Industries (down 1.55 per cent), Rana Sugars (down 1.96 per cent), Oudh Sugar Mills (down 2.4 per cent), Shree Renuka Sugar (down 1.4 per cent), Bajaj Hindusthan (down 1.1 per cent), EID Parry (down 0.5 per cent) and Balrampur Chini Mills (down 0.4 per cent).
Meanwhile, the BSE Sensex was down by about 100 points or 0.6 per cent.
The CCEA has accepted the recommendations of the Commission for Agricultural Costs and Prices to hike the sugarcane FRP due to rising production costs.
While FRP is fixed by the Centre, some states such as Uttar Pradesh and Tamil Nadu prefer to have their own rate called State Advisory Price, which is higher than FRP.