The Cabinet on Wednesday cleared a fair and remunerative price (FRP) of ₹275 per quintal — the same as last year — for sugarcane sold to mills during the forthcoming sugar season of 2019-20, much to the chagrin of sugarcane growers.

The FRP is the minimum price that sugarcane farmers are legally guaranteed to get from sugar mills. The crop, which has a more than 10 per cent recovery rate, will get an additional ₹2.75 per quintal for every 0.1 per cent increase, an official statement said.

Farmers in many States such as Andhra Pradesh, Karnataka and Maharashtra, are paid on the basis of the FRP set by the Centre. Others, in Uttar Pradesh, Punjab, Tamil Nadu etc, have a State Advised Price.

Buffer stock

The Cabinet today also decided to create a sugar buffer stock of 4 million tonnes — 1 mt more than last year — to help the sugar industry, which has been reeling under an output glut. This may cost the national exchequer up to ₹1,674 crore, the statement said, adding that it is based on the market price and availability of sugar. This move may be reviewed by the Department of Food and Public Distribution at any time for withdrawal/modification.

VM Singh, National Convenor of the All India Kisan Sangharsh Coordination Committee, called the FRP decision disappointing. “UP Minister for Cane Development and Sugar Mills Suresh Rana recently told the State Assembly that the production cost of sugarcane is ₹290 per quintal. The Narendra Modi government has been tom-tomming about giving farmers one-and-a-half times the production cost as prices. The FRP is not enough to help farmers meet their production cost,” Singh said.

“It is unfair and extremely disappointing,” said Kurbur Shantakumar, President, Karnataka Sugarcane Growers Association. Considering that the MSP of sugar has been raised to ₹31 per kg, the FRP should have been fixed at ₹300 per quintal, he said.

The Indian Sugar Mills Association called both decisions “extremely positive”. Over the last few years, the increase in FRP has been quite steep as against returns from other crops, and the decision to keep it at the same level as last year will help restore balance, said ISMA Director General Abinash Verma.

On increasing the buffer stock, he said: “Not only will it give extra cash flows to mills, it will also improve market sentiments, because the creation of a buffer immediately withdraws 4 mt of sugar from the market for the next 12 months.”