New Delhi: The Union Cabinet on Wednesday approved the government's proposal to increase the Fair and Remunerative Price (FRP), which is a minimum price that mills have to pay to sugarcane growers, by Rs 5 per quintal to Rs 290 a quintal for 2021-22 marketing year.
However, the government has ruled out any immediate increase in the selling price of sugar. The decision to increase FRP of sugarcane for the 2021-22 marketing year (October-September) was taken in the meeting of the Cabinet Committee on Economic Affairs (CCEA) on Wednesday. The government had fixed sugarcane FRP at Rs 285 per quintal for the current 2020-21 marketing year.
While briefing about the Cabinet decisions, Food and Consumer Affairs Minister Piyush Goyal said that the FRP has been increased to Rs 290 per quintal for a basic recovery rate of 10 per cent.
"A premium of Rs 2.90/quintal will be provided for each 0.1 per cent increase in recovery over and above 10 per cent. There will be a reduction in FRP by Rs 2.90/quintal for every 0.1 per cent decrease in recovery," the Union Minister said.
"To protect the interests of farmers, the government has also decided that there would be no deduction where recovery is below 9.5 per cent. Such farmers will get Rs 275.50 per quintal for sugarcane in ensuing sugar season 2021-22 in place of Rs 270.75 per quintal in current sugar season 2020-21," the minister said.
"The cost of production of sugarcane for the sugar season 2021-22 is Rs 155 per quintal. The FRP of Rs 290 per quintal at a recovery rate of 10 per cent is higher by 87 per cent over production cost," he said, adding that sugarcane farming is more remunerative than other crops.
As per the government estimates, the decision will benefit around 5 crore sugarcane farmers and their dependents, as well as about 5 lakh workers employed in sugar mills and related ancillary activities.
In response to a question on the government's plan to increase the minimum selling price (MSP) of sugar as FRP has been raised, Goyal said that it won't happen.
"As the government is giving a lot of support to increase sugar exports and ethanol production, we do not see any reason at the present moment for increasing the (sugar) selling price," he said, adding that the sugar prices have remained stable in the
domestic market.