New Delhi (PTI): The Centre on Wednesday hiked the 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, but ruled out any immediate increase in the selling price of sugar.
The decision to increase the Fair and Remunerative Price (FRP) of sugarcane for the 2021-22 marketing year (October-September) was taken in the meeting of the Cabinet Committee on Economic Affairs (CCEA) held here.
The government had fixed sugarcane FRP at Rs 285 per quintal for the current 2020-21 marketing year.
Briefing the media after the Cabinet meeting, Food and Consumer Affairs Minister Piyush Goyal said the FRP has been increased to Rs 290 per quintal for a basic recovery rate of 10 per cent.
He said 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.
To protect interest of farmers, Goyal said the government has 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 sugar cane farming is more remunerative than other crops.
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.
When asked if the government will increase the minimum selling price (MSP) of sugar as FRP has been raised, Goyal said: “Not necessarily”.
He said the government is giving a lot of support to increase sugar exports and ethanol production.
The Centre fixes sugar MSP, which is the floor price below which mills cannot sell the sweetener in the market. The current MSP is Rs 31 per kg.