Government Hikes Sugarcane FRP By Rs 15/Quintal To Rs 305 Per Quintal For 2022-23 Season

The government on Wednesday increased the minimum price that mills have to pay to sugarcane growers by Rs 15 to Rs 305 per quintal for the 2022-23 marketing year starting October.

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.

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has approved the Fair and Remunerative Price of sugarcane for the 2022-23 sugar marketing year (October - September) at Rs 305 per quintal for a basic recovery rate of 10.25%, an official statement said.

The cost of production of sugarcane for the 2022-23 marketing year is Rs 162 per quintal.

A premium of Rs 3.05 per quintal will be provided for each 0.1% increase in recovery over and above 10.25%, while there will be a reduction in FRP by Rs 3.05 per quintal for every 0.1% decrease in recovery.

However, there would not be any deduction in the case of sugar mills where recovery is below 9.5%. Such farmers are likely to get Rs 282.125 per quintal for sugarcane in 2022-23 as against Rs 275.50 per quintal in the current sugar season 2021-22

"The A2 + FL cost of production of sugarcane (i.e actual paid out cost plus imputed value of family labour) for the sugar season 2022-23 is Rs 162 per quintal," the statement said.

The FRP of Rs 305 per quintal at a recovery rate of 10.25% is higher by 88.3% over the cost of production, thereby ensuring the promise of giving the farmers a return of more than 50% over their cost. The FRP for sugar season 2022-23 is 2.6% higher than the current sugar season 2021-22.

"Due to proactive policies of Central Government, sugarcane cultivation and the sugar industry has come a long way in past 8 years and now reached a level of self-sustainability," the statement said.

The government highlighted that it has increased FRP by more than 34% in past eight years. It has also introduced the concept of Minimum Selling Price of sugar to prevent a fall in ex-mill prices of sugar and accumulation of cane arrears. The MSP is currently at Rs 31 per kg.

"Financial assistance of more than Rs 18,000 crore extended to sugar mills to facilitate the export of sugar, for maintaining buffer stocks, to augment ethanol production capacity and for clearance of farmers’ dues," the food ministry said.

The diversion of surplus sugar for the production of ethanol led to improved financial conditions of sugar mills and they are now able to clear cane dues early.

"Nine years back, FRP was only Rs 210/ quintal in sugar season 2013-14 and only about 2,397 lakh tonnes of sugarcane was purchased by sugar mills. Farmers were getting only about Rs 51,000 crore from the sale of sugarcane to sugar mills."

"However, in past eight years, Government has increased FRP by more than 34%. In the current sugar season 2021-22, about 3,530 lakh tons of sugarcane of worth Rs 1,15,196 crore was purchased by sugar mills, which is at all-time high," the statement said.

In the next 2022-23 marketing year, more than 3,600 lakh tons of sugarcane are likely to be purchased by sugar mills worth more than Rs 1,20,000 crore.

"In the previous sugar season 2020-21, about Rs 92,938 crores cane dues were payable, out of which Rs 92,710 crore has been paid and only Rs 228 crore arrears are pending," the ministry said.

In the current 2021-22, out of cane dues payable of Rs 1,15,196 crore, about Rs 1,05,322 crore have been paid to farmers, as of August 1.

The government also highlighted that India has surpassed Brazil in sugar production in the current sugar marketing year. In the last four seasons of 2017-18, 2018-19, 2019-20 & 2020-21, about 6 lakh tonnes, 38 lakh tonnes, 59.60 lakh tonnes and 70 lakh tonnes of sugar have been exported, respectively.

"About 100 lakh tonnes of sugar has been exported till August 1, 2022, in the current sugar season 2021-22 and exports likely to touch 112 lakh tonnes," the statement said.