Govt. okays Fair and Remunerative Price of sugarcane payable by sugar mills for 2021-22 season
Commerce & Industry Minister Piyush Goyal and Information & Broadcasting Minister Anurag Thakur briefing journalists about Cabinet decisions, in New Delhi on August 25, 2021.

Govt. okays Fair and Remunerative Price of sugarcane payable by sugar mills for 2021-22 season

New Delhi, August 26, 2021

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved Fair and Remunerative Price (FRP) of sugarcane for sugar season 2021-22 (October - September) at Rs 290 per quintal for a basic recovery rate of 10%.

It provides a premium of Rs 2.90 per quintal for each 0.1% increase in recovery over and above 10% and a reduction in FRP by that much amount for every 0.1% decrease in recovery, an official press release said.

There will be no deduction in the case of sugar mills where recovery is below 9.5%. Such farmers will get Rs 275.50 per quintal for sugarcane in the ensuing sugar season 2021-22 in place of Rs 270.75 per quintal in the current sugar season.

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% is higher by 87.1% over production cost, thereby giving the farmers a return of much more than 50% over their cost, the release said.

In the current sugar season 2020-21, about 2,976 lakh tonnes of sugarcane worth Rs 91,000 crore was purchased by sugar mills, which is at an all-time high level and the second-highest next 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 Government will also ensure that sugarcane farmers get their dues in time, the release said.

The FRP approved shall be applicable for the purchase of sugarcane from the farmers in the sugar season 2021-22 (starting w.e.f. October 1, 2021) by sugar mills.

The sugar sector is an important agro-based sector that impacts the livelihood of about 5 crore sugarcane farmers and their dependents and around 5 lakh workers directly employed in sugar mills, apart from those employed in various ancillary activities including farm labour and transportation.

The FRP has been determined on the recommendations of the Commission for Agricultural Costs and Prices (CACP) and after consultation with State Governments and other stakeholders, the release said.

In the last three sugar seasons 2017-18, 2018-19 & 2019-20, about 6.2 lakh metric tonnes (LMT), 38 LMT & 59.60 LMT of sugar, respectively, have been exported. 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 have been physically exported as of August 23, 2021.

"The export of sugar has improved the liquidity of sugar mills enabling them to clear cane price dues of farmers," the release said.

The Government 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 the last two sugar seasons 2018-19 & 2019-20, about 3.37 LMT & 9.26 LMT of sugar has been diverted to ethanol.

In the 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 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 the past 3 sugar seasons about Rs 22,000 crore revenue was generated by sugar mills/ distilleries from the sale of ethanol to Oil Marketing Companies (OMCs). In the current sugar season 2020-21, about Rs 15,000 cr revenue is being generated by sugar mills from the sale of ethanol to OMCs at 8.5%. This is expected to significantly increase in the next three years by going up to 20% blending by 2025.

In the previous sugar season 2019-20, about Rs 75,845 crores 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 crores, Rs 86,238 crores cane dues have already been paid to farmers. An increase in export & diversion of sugarcane to ethanol is ensuring timely cane price payments to farmers.

NNN

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