Sugarcane farmers may get a 3.3 per cent increase in the price they get for the sugarcane from sugar mills next season starting October. The Commission for Agricultural Costs and Prices (CACP) has recommended that the fair and remunerative price (FRP) of sugarcane be ₹315/quintal for a 10.25 per cent sugar recovery rate for the 2023-24 season against ₹305 now.

The Cabinet is likely to decide on the FRP this month, sources said. The more the recovery, the higher will be the cane price. The recovery rate is the quantum of sugar produced out of the sugarcane which depends on the crop’s juice content.

For the current season, the FRP is estimated to be 88 per cent more than the A2+FL cost of production (which is all input costs plus the value of imputed family labour) and 30 per cent above C2 (comprehensive cost including family labour, imputed rent of owned land and imputed interest on owned capital) cost. It is not immediately known how much increase from cost of production has been estimated for next year.

Impact of recommendation

The decision on FRP will be crucial as it will have a lot of impact on sugarcane farmers’ opinion when the General Election is scheduled for 2024. Besides, when the ethanol blending target has to be enhanced to 15 per cent next season, farmers need to be encouraged so that they do not lower the sugarcane acreage, which has already commenced.

Also, sugar production is projected to fall in the current season (October-September) to 32.8 million tonnes (mt) from 35.76 mt last season, according to the Indian Sugar Mills Association (ISMA), an industry body of private sugar companies. Though it is higher than the annual domestic consumption of 27.5 mt, it still does not provide unlimited opportunities either for export or diversion towards ethanol.

Though, the CACP has reiterated to accept the revenue sharing formula, it is unlikely to be accepted, sources said. Under the revenue sharing formula suggested by the Rangarajan committee, mills have to pass on to farmers 75 per cent of realisation from sugar alone and 70 per cent from by-products. The Niti Aayog task force has suggested cane price as 80 per cent of realisation from sugar alone and 75 per cent from by-products.

Among other recommendations, CACP is said to have suggested the minimum selling price (MSP) of sugar, fixed by the government, should be revised regularly based on FRP and other factors.

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