Government hikes sugarcane prices by Rs 20 to Rs 275 per quintal

The Cabinet Wednesday hiked the minimum price at which sugar mills buy cane from the farmers by Rs 20 per quintal to Rs 275 per quintal (100kg) for the next marketing year starting October

The Cabinet Wednesday hiked the minimum price at which sugar mills buy cane from the farmers by Rs 20 per quintal to Rs 275 per quintal (100kg) for the next marketing year starting October, Union law and information technology minister Ravi Shankar Prasad has said.

A farmer works in his sugarcane field on the outskirts of Ahmedabad February 28, 2015. (Reuters File Photo)

The ‘fair and remunerative price’ (FRP) is linked to a basic recovery rate of 10%. In sugar industry jargon, recovery rate is the amount of sugar that can be extracted from a given quantity of cane, usually a quintal.

The government will also offer a premium of Rs 2.75 per quintal for each 0.1% increase in the recovery beyond 10%.

An official statement said the cost of production of sugarcane for 2018-19 is pegged at Rs 155/quintal and the FRP of Rs 275 per quintal at a recovery rate of 10% is 77.42% over the production cost. This will ensure growers get more than 50% returns over the costs, the statement added.

While the government offers minimum support prices for 24 crops, in the case of sugarcane, it fixes the FRP, which is a guaranteed price. State governments usually add their own bonus prices over and above the FRP.

Millers have been suffering losses due to surplus output, leading to piling sugarcane arrears or money that the sugar mills owe to the farmers, which stands at nearly Rs 22,000 crore.