The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved fair and remunerative price (FRP) of sugarcane payable by sugar mills for the 2021-22 season.
Briefing reporters about the cabinet decisions, Union Commerce and Industry Minister Piyush Goyal said the cabinet has approved the highest-ever Fair and Remunerative Price of Rs 290 per quintal for sugarcane farmers for a basic recovery rate of 10 per cent.
“The decision will benefit the 5 crore sugarcane farmers and their dependents, as well as the 5 lakh workers employed in the sugar mills and related ancillary activities,” he said.
Officials said that the cost of production of sugarcane for the sugar season 2021-22 is Rs 155 per quintal and the FRP of Rs 290 per quintal at a recovery rate of 10 per cent is higher by 87.1 per cent over production cost, giving the farmers a return of much more than 50 over their cost.
They said that 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 is 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 tons of sugarcane is likely to be purchased by sugar mills.
The officials said that total remittance to the sugarcane farmers will be about Rs 1,00,000 crore and the government will ensure that sugarcane farmers get their dues in time.
An official release said that the government’s proactive approach to protect the interests of farmers is also seen in the decision of no deduction where recovery is below 9.5 per cent. Such farmers will get Rs 275.50 per quintal for sugarcane in the ensuing sugar season in place of Rs. 270.75 per quintal in current sugar season 2020-21.
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 87.1 per cent over production cost, thereby giving the farmers a return of much more than 50 per cent over their cost,” the release said.
The FRP approved shall be applicable for the purchase of sugarcane from the farmers in the sugar season 2021-22, starting from October 1, by sugar mills.
The release said that the sugar sector is an important agro-based sector that impacts the livelihood of about 5 crores 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.
It said that in the last 3 sugar seasons about 6.2 lakh metric tonne (LMT), 38 LMT and 59.60 LMT of sugar have been exported respectively.
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 has been physically exported from the country as on August 23.
The release said the export of sugar has improved the liquidity of sugar mills enabling them to clear cane price dues of farmers.
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.
The release said that about 60 LMT of sugar is targeted to be diverted to ethanol by 2024-25, which would address the problem of excess sugarcane as well as delayed payment because farmers would get timely payment.
It said that in the past three sugar seasons about Rs. 22,000 crore revenue was generated by sugar mills and distilleries from the sale of ethanol to Oil Marketing Companies (OMCs).
In the current sugar season 2020-21, about Rs. 15,000 crore revenue is being generated by sugar mills from sale of ethanol to OMCs. “This is expected to significantly increase in the next three years as we go up to 20 per cent blending by 2025,” the release said.
The release also said that about Rs. 75,845 crore cane dues were payable in the previous sugar season 2019-20 out of which Rs 75,703 crore has been paid and only Rs 142 crore arrears are pending.
It said that in the current sugar season 2020-21, out of cane dues payable of Rs. 90,959 crore, Rs 86,238 crore cane dues have already been paid to farmers.
“Increase in export and diversion of sugarcane to ethanol is ensuring timely cane price payments to farmers,” the release said.
