The Union Cabinet will consider tomorrow a proposal to increase the minimum price that sugar mills are required to pay to cane growers by Rs 20 to Rs 275 per quintal for the next marketing year starting October, according to sources.
The Cabinet Committee on Economic Affairs (CCEA) is scheduled to meet tomorrow and is likely to consider a proposal to fix the Fair and Remunerative Price (FRP) of sugarcane for the 2018-19 marketing year, they added.
The government recently announced a sharp increase in the minimum support price (MSP) of kharif (summer-sown) crops including paddy.
The Commission for Agricultural Costs and Prices (CACP) had recommended Rs 20 per quintal hike in the FRP of sugarcane at Rs 275 per quintal for next season.
The FRP, which is the minimum price that sugar mills have to pay to sugarcane farmers, is Rs 255 per quintal for the 2017-18 season.
The CACP is a statutory body that advises the government on the pricing policy for major farm produce. Usually, the government accepts the CACP recommendations.
At present, the FRP price is linked to a basic recovery rate of 9.5 per cent, subject to a premium of Rs 2.68 per quintal for every 0.1 per cent point increase in recovery rate.
Sources said that the basic recovery rate could be increased to 10 per cent.
The proposed increase is also likely to result in states like Uttar Pradesh that do not follow the centrally-announced FRP raising their own advisory prices.
Major sugarcane producing states such as Uttar Pradesh, Punjab and Haryana fix their own sugarcane price called ‘state advisory prices’ (SAPs), which are usually higher than the Centre’s FRP.
India’s sugar production is estimated to rise by 10 per cent to touch a new record of 35.5 million tonnes in the next marketing year, starting October as cane output could rise on normal rains, according to the industry body ISMA.
Sugar production in India, the world’s second largest producer after Brazil, is estimated to reach a record 32.25 million tonnes in the current 2017-18 marketing year (October-September)