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The Centre has managed to balance the needs of farmers and sugar mills by hiking the Fair and Remunerative Price for sugarcane in the 2018-19 season, but linking it to 10 per cent sugar recovery as opposed to the norm of 9.5 per cent so far, say industry representatives.
This will benefit major sugarcane producers such as Uttar Pradesh, Maharashtra and North Karnataka where recoveries are higher at around 10 per cent.
Major beneficiaries
Simultaneously, it has also protected regions with lower sugar recoveries by not allowing deductions in sugarcane pricing if recovery is less than 9.5 per cent. This will protect producers in States such as Tamil Nadu, Bihar and South Karnataka with lower recoveries but will not overburden mills.
However, industry representatives said the government will have to hike the minimum selling price of sugar if the sugarcane prices are to be viable.
According to Palani G Periasami, President, South Indian Sugar Mills Association – Tamil Nadu, the hike in cane FRP to ₹2,750 a tonne linked to 10 per cent sugar recovery for the 2018-19 season (October-September) from the current year’s ₹2,650 linked to 9.5 per cent is a welcome step.
Farmers in areas with higher than 10 per cent recovery, including in pockets of Tamil Nadu, will get the full benefit along with incentive price. Even those with lesser recovery will get a better price than they have done in the current season.
N Ramanathan, former president of SISMA–TN, said the higher pricing will enthuse farmers to expand sugarcane coverage, particularly in Tamil Nadu, where mills are working at less than 25 per cent of capacity.
Selling price of sugar
But it has now become an “absolute necessity” to hike the minimum price of sugar. Against a production cost of ₹34 a kg, sugar mills are losing at even current year’s sugarcane price.
The minimum price of sugar has to be hiked to ₹38-40 taking into account the export losses. The industry and the government have recognised that at least 80 lakh tonnes of sugar will have to be exported over the next year.
This is in the backdrop of a bumper 320 lakh tonnes of sugar production in the current season and a higher forecast for 2018-19, he said.
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