The government, on Wednesday, hiked fair and remunerative price for sugarcane by ₹20/ quintal to ₹275 per quintal for the forthcoming season beginning October.

A decision in this regard was taken during the meeting of the Cabinet Committee on Economic Affairs (CCEA).

Farmers will receive 77 per cent over and above the average cost of production which is estimated to be ₹155 per quintal, said Minister for Law and Justice Ravi Shankar Prasad, who briefed the media after the CCEA meeting.

However, both major stakeholders — the sugar industry and farmers — seem to be unhappy with the quantum of hike. While the sugar industry argued the hike was too much, farmers claimed it was too meagre.

VM Singh, a noted sugarcane farmer leader from Uttar Pradesh, not only contested the the average cost quoted by the Minister, but said the effective increase in FRP was “less than peanuts” as the government has increased the basic recovery rate from 9.5 per cent to 10 per cent for the FRP calculation. “While farmers were getting an FRP of ₹255 for a basic recovery rate of 9.5 per cent this season, the announced FRP was for a recovery rate of 10 per cent. In other words, the effective increase was less than ₹ 7 per quintal. Who is this government trying to fool?” Singh asked.

Abinash Verma, Director-General of Indian Sugar Mills Association (ISMA), the trade body representing sugar mills, said the increase would add to the burden of sugar mills, which are already struggling to clear the arrears to cane farmers. “The current FRP of ₹255 per quintal linked to a basic recovery rate of 9.5 per cent, is unaffordable at current sugar prices, because of which at the end of June, cane price arrears are still over ₹18,000 crore. For the first time, the cane arrears are so high, and the highest ever. This is almost ₹14,000-15,000 crore higher as compared to the last two years in June when the cane arrears were at about ₹4,500-4,800 crore,” Verma said.

“The increased FRP for the next season will be more unaffordable for the sugar mills to pay to the farmers, unless concrete and focussed steps are taken to help improve ex-mill sugar prices to at least ₹35 a kg,” Verma said.

As per the details worked out by the Government, farmers would get a premium of ₹2.75 for each 0.1 per cent increase in recovery over and about 10 per cent. The total remittance to sugarcane farmers in the 2018-19 sugar season would work out to ₹83,000 crore, which is ₹3,000 crore more than the current season, said Food Minister Ram Vilas Paswan.

According to Paswan, the Modi government has been taking a series of measures, primarily to help sugarcane farmers in the country, which has so far helped reduce their arrears by nearly ₹6,000 crore in the last two months. The arrears which stood at ₹23,232 crore on May 21 came down to ₹17,824 crore by July 17, he said.