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New Delhi: The Center on Wednesday asked sugarcane growers to hike the minimum price to sugar mills by Rs 5 per quintal to Rs 290 per quintal for the 2021-22 marketing year, but ruled out an immediate increase in the selling price of sugar.
In a meeting of the Cabinet Committee on Economic Affairs (CCEA), it was decided to increase the Fair and Remunerative Price (FRP) of sugarcane for the marketing year 2021-22 (October-September).
The government had fixed the FRP of sugarcane at Rs 285 per quintal for the current 2020-21 marketing year.
Briefing the media after the cabinet meeting, Food and Consumer Affairs Minister Piyush Goyal said that the FRP has been increased to Rs 290 per quintal for the original recovery rate of 10%.
He said a premium of Rs 2.90/quintal would be provided for every 0.1% increase in recovery and more than 10%.
For every 0.1 per cent reduction in recovery, there will be a reduction in FRP by Rs 2.90 per quintal.
To protect the interest of farmers, Goyal said the government has decided that there will be no deduction where the recovery is less than 9.5 per cent.
“Such farmers will get Rs 275.50 per quintal for sugarcane in the upcoming sugar season 2021-22 instead of Rs 270.75 per quintal in the current sugar season 2020-21,” the minister said.
The production cost of sugarcane for the sugar season 2021-22 is Rs 155 per quintal. The FRP of Rs 290 per quintal is 87% more than the cost of production at the recovery rate of 10%, he said, adding that sugarcane farming is more profitable than other crops.
This decision will benefit about 5 crore sugarcane farmers and their dependents as well as about 5 lakh workers employed in sugar mills and allied activities.
Asked whether the government will increase the minimum selling price (MSP) of sugar as the FRP has been increased, Goyal said: “Not necessarily”.
He said that the government is giving full cooperation to increase sugar exports and ethanol production.
“Considering all these factors, we do not see any reason to increase the selling price (sugar) at the present time,” he said, adding that sugar prices in the domestic market remain stable.
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He also said that the government has ensured a “delicate balance” between the interests of farmers and consumers as well as industry.
The Center fixes the MSP of sugar, which is the minimum price from which mills cannot sell sugar in the market. The current MSP is Rs 31 per kg.
Goyal said that the recovery of sugar material is improving as farmers are using modern technology and new farming practices.
Talking about sugar exports, the minister said that sugar mills have signed contracts for export of 70 lakh tonnes in the current marketing year 2020-21, out of which 55 lakh tonnes have already been shipped, and the remaining 15 lakh. Tons in the pipeline.
Goyal said that the government is giving financial assistance to the mills to increase exports.
“The government is promoting sugar exports to ensure timely payment of cane to farmers,” he said.
On ethanol, Goyal said that the use of ethanol for blending in petrol has been increasing in the last few years.
In the last three sugar seasons, revenue of about Rs 22,000 crore was earned from the sale of ethanol by sugar mills/distilleries to oil marketing companies (OMCs).
In the current sugar season 2020-21, sugar mills are getting revenue of about Rs 15,000 crore from the sale of ethanol at 8.5% to OMCs.
The minister said that ethanol blending in petrol will increase to 20% from the current level in the next three years.
According to Goyal, the revenue from ethanol will increase to Rs 40,000 crore per annum from the current Rs 15,000 crore, which will ensure that mills make timely payments to farmers.
According to an official statement, in the last sugar season 2019-20, about Rs 75,845 crore cane arrears were due, out of which Rs 75,703 crore has been paid and only Rs 142 crore is outstanding.
In the current sugar marketing year 2020-21, out of Rs 90,959 crore cane arrears, Rs 86,238 crore has already been paid to the cane arrears farmers.
The minister said that by increasing exports and converting sugarcane into ethanol, farmers are ensuring timely payment of cane price, and sugarcane growers will no longer have to wait long to receive payment from mills.
Goyal also appreciated the Uttar Pradesh government for clearing all dues of sugarcane farmers for the marketing years 2017-18, 2018-19 and 2019-20.
He further said that the dues for the current 2020-21 marketing year would be cleared soon.
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