Agri Business

Cane farmers may have earned up to ₹9,000 crore more under revenue-share, rather than FRP, model: CACP chief

Our Bureau New Delhi | Updated on December 05, 2019

Vijay Paul Sharma, Chairman, CACP (file photo)

Contrary to popular perception, opting for a revenue share, as recommended by the C Rangarajan panel in 2012, instead of the practice of paying a fair and remunerative price (FRP) for sugarcane, would not have resulted in any loss for farmers. Rather, farmers would have gained ₹8,000-9,000 crore more in the past 10 years, said Commission for Agricultural Costs and Prices (CACP) Chairman Vijay Paul Sharma on Thursday.

The CACP, which compared the revenue-share mechanism with the FRP for 10 years — from 2009-10 to 2018-19 — found that farmers would have got more than the FRP during five of these 10 years on account of higher sugar prices, and slightly less than the FRP during the other five.

But, overall, farmers would have got an additional ₹8,000-9,000 crore, Sharma said while inaugurating the 85th Annual General Meeting of the Indian Sugar Mills Association (ISMA) here. Currently, most sugar-producing States, including Maharashtra, Karnataka and Andhra Pradesh, pay an FRP of ₹275 per quintal for cane, while Uttar Pradesh and Tamil Nadu have a State Advised Price, which is usually slightly higher than the FRP.

Sharma admitted that in many years, the FRP, which is calculated solely on the basis of the cost of production, does not take into account market conditions — domestic or global.

The CACP chairman was also of the opinion that it was high time the sector evolved self-financing mechanism rather than depend on government funds.

ISMA President Rohit Pawar, in his address, said a recent study by the International Sugar Organization had found that among the 22 sugar-producing countries only in six, including India, were sugarcane prices set by the government. Among these six nations, India is the only sugar exporter.

“All the sugar exporting nations have a very transparent system of automatically determining the prices of sugarcane at a certain percentage, of around 60-66 per cent, of the revenue realised by the products made out of sugarcane. However, in India, we pay almost 90 per cent of our revenue realisation as cane price, and unless something is done, we would continue to remain uncompetitive in the global market,” said Pawar, who is also a member of the Maharashtra Assembly.

The ISMA president suggested that the government create a fund, as the CACP has been recommending, to pay growers the difference between what the industry would pay them under a revenue-sharing formula and the FRP the government wants to give.

“The fund can then bridge the gap which, in turn, will ensure that farmers get their FRP and the industry is able to produce sugar at a reasonable cost. That will make us competitive in the international market,” he said.

Published on December 05, 2019

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