Ahead of the Uttar Pradesh assembly elections, the Cabinet Committee on Economic Affairs has approved the fair and remunerative price (FRP) of sugarcane for sugar season 2021-22 (October - September) at Rs. 290 per quintal.
“The cost of production of sugarcane for the sugar season 2021-22 is Rs. 155 per quintal. This FRP of Rs. 290 per quintal at a recovery rate of 10 per cent is higher by 87.1 per cent over production cost, thereby giving the farmers a return of much more than 50 per cent over their cost,” Union Minister of Commerce and Consumer Affairs Piyush Goyal said.
The FRP will be based on basic recovery rate of 10 per cent, providing a premium of Rs. 2.90 per quintal for each 0.1 per cent increase in recovery over and above 10 per cent. There will be reduction in FRP by Rs. 2.90 per quintal for every 0.1 per cent decrease in recovery.
“The government’s proactive approach to protect the interest of farmers is also seen in the decision of no deduction in case of sugar mills 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.
Sugarcane prices has been a sensitive issue with the farmers. On Tuesday, the Punjab government had agreed to increase the price by Rs 50 per quintal after the farmers blocked the national highway and railway lines. The new price will be Rs. 350 per quintal—the highest ever increase for the produce. The farmers had lifted the blockade in the state after the government's announcement.
The increase in FRP for sugarcane will help the farmers of Uttar Pradesh, particularly western UP, who have bee demanding higher prices, and payment of dues. With this decision, the BJP will now reach out to the agitating farmers in the state ahead of the elections next year.
Giving details of the procurement, Goyal said in the current sugar season 2020-21, about 2,976 lakh tons of sugarcane of worth Rs. 91,000 crore was purchased by sugar mills—the highest ever procurement of the produce, and second only to the procurement of paddy crop at Minimum Support Price.
Keeping the expected increase in the production of sugarcane in the ensuing sugar season 2021-22, about 3,088 lakh tonnes of sugarcane is likely to be purchased by sugar mills. The total remittance to the sugarcane farmers will be about Rs. 1,00,000 crore.
The FRP approved shall be applicable for purchase of sugarcane from the farmers in the sugar season 2021-22 (starting from October 1, 2021) by sugar mills.
The FRP has been determined on the basis of recommendations of Commission for Agricultural Costs and Prices (CACP) and after consultation with state governments and other stake-holders, officials said.
In last three sugar seasons 2017-18, 2018-19 and 2019-20, about 6.2 Lakh Metric Tonne (LMT), 38 LMT and 59.60 LMT of sugar has been exported respectively. In the current sugar season 2020-21 (Oct – Sept.), against the export target of 60 LMT, contracts of about 70 LMT have been signed and more than 55 LMT has been physically exported from the country, as on 23.8.2021. Export of sugar has improved liquidity of sugar mills, enabling them to clear cane price dues of farmers.
The government said it is also encouraging sugar mills to divert excess sugarcane to ethanol which is blended with petrol, which not only serves as a green fuel but also saves foreign exchange on account of crude oil import. In last two sugar seasons, 2018-19 and 2019-20, about 3.37 LMT and 9.26 LMT of sugar has been diverted to ethanol. In current sugar season 2020-21, more than 20 LMT is likely to be diverted. In the ensuing sugar season 2021-22, about 35 LMT of sugar is estimated to be diverted and by 2024-25 about 60 LMT of sugar is targeted to be diverted to ethanol, which would address the problem of excess sugarcane as well as delayed payment issue because farmers would get timely payment.
In past three sugar seasons, about Rs. 22,000 crore revenue was generated by sugar mills/ distilleries from sale of ethanol to Oil Marketing Companies (OMCs). In the current sugar season 2020-21, about Rs. 15,000 crore revenue is being generated by sugar mills from sale of ethanol to OMCs. This is expected to significantly increase in the next three years.
“In the previous sugar season 2019-20, about Rs. 75,845 crore cane dues were payable, out of which Rs. 75,703 crore has been paid and only Rs. 142 crore arrears are pending. Even, in the current sugar season 2020-21, out of cane dues payable of Rs. 90,959 crore, Rs. 86,238 crore cane dues have already been paid to farmers. Increase in export and diversion of sugarcane to ethanol is ensuring timely cane price payments to farmers,” a government statement said.