The Cabinet Committee on Economic Affairs (CCEA) on Wednesday fixed the fair and remunerative price (FRP) of sugarcane at ₹305/quintal, at a 10.25 per cent recovery rate for the 2022-23 season (October-September), revising it upwards from ₹290 at 10 per cent recovery rate for 2021-22. This change in recovery rate has left the effective cane price hike at 2.6 per cent from last year, potentially helping sugar mills to increase their profit.

The decision, based on the recommendation of the Commission for Agricultural Costs and Prices (CACP), has raised the recovery rate by 0.25 per cent after both the cane juice content and yield increased following the adoption of high-yielding varieties developed by the Indian Council of Agricultural Research (ICAR).

The farmers will get a minimum ₹282.125/quintal even if recovery falls below 9.5 per cent. This means mills can deduct a maximum ₹22.875/quintal from FRP citing lower recovery at ₹3.05 for each 0.1 per cent. Higher the recovery from 10.25 per cent, higher will be the cane price. The recovery rate is the quantum of sugar produced from sugarcane, which depends on the juice content.

According to CACP, the new FRP is 88 per cent more than the A2+FL cost of production and 30 per cent above the C2 cost estimated for 2022-23.

Sugar exports

The government said sugar exports are likely to touch 112 lakh tonnes (lt) in the current season, against 70 lt last season. The cap of 100 lt for exports this season, notified by the Director-General of Foreign Trade (DGFT) in May, confirms the recent decision of a panel of ministers under Home Minister Amit Shah to allow an additional 12 lt quota. The sugar industry had sought 10 lt of additional export quota above the cap.

“India has surpassed Brazil in sugar production in the current sugar season. With the increase in production in the past eight years, apart from meeting the requirement for domestic consumption, India has been exporting sugar which has helped in reducing our fiscal deficit,” the government said in a statement.

“Due to the proactive policies of the Central Government, sugarcane cultivation and the sugar industry has come a long way in the past eight years and has now reached a level of self-sustainability. This is the outcome of timely government interventions and collaboration with the sugar industry” and others, it said, adding FRP has been raised by more than 34 per cent in the past eight years.

The government has also introduced the concept of Minimum Selling Price to prevent a fall in ex-mill prices of sugar and accumulation of cane arrears. This was fixed at ₹29/kg (w.e.f June 7, 2018) initially and was revised to ₹31 in February 2019.

The Indian Sugar Mills’ Association (ISMA) has urged the Food Ministry to increase the floor price to ₹36-37 per kg due to a rise in production cost. In a letter to Food Secretary, ISMA President Aditya Jhunjunwala has said the selling price is important for mills to pay the FRP. The average all India ex-mill prices are currently around ₹33-34 per kg, while mills in Maharashtra and Karnataka sell for ₹32-22 per kg — much lower than the cost of production of around ₹36-37 per kg, he said.

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