The Centre on Wednesday approved Fair and Remunerative Price (FRP) of sugarcane for the sugar season 2021-22 at Rs 290/quintal, calling it the “highest ever”.

The approved FRP will be applicable for the sugar season 2021-22, starting October 1, and is being seen in light of the upcoming Assembly election in the key growing state, Uttar Pradesh.

“Keeping in view the interest of sugarcane farmers, the Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi has approved FRP of sugarcane for the sugar season 2021-22 (October -September) at Rs 290 per quintal for a basic recovery rate of 10 per cent, providing a premium of Rs 2.90 per quintal for each 0.1 per cent increase in recovery over and above 10 per cent and reduction in FRP by Rs 2.90 per quintal for every 0.1 per cent decrease in recovery,” Consumer Affairs Minister Piyush Goyal said.

The decision will benefit five crore sugarcane farmers and their dependents, as well as the five lakh workers employed in the sugar mills and related ancillary activities, he added.

There will be deduction in case of sugar mills where recovery is below 9.5 per cent, Goyal said, adding that such farmers would get Rs 275.50 per quintal in 2021-22 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 minister 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, he added.

With the election on mind, Punjab’s Congress government on Tuesday announced a hike in state advised price (SAP) of sugarcane by Rs 50 per quintal over the last year’s price, fixing it at Rs 360 per quintal.

FRP and SAP are the rates at which sugar mills pay farmers for their raw material.

The FRP is announced by the Centre. It is determined on the basis of recommendations of Commission for Agricultural Costs and Prices (CACP) and after consultation with state governments and other stake-holders.

While SAP is a fixed amount, FRP is based on the recovery rate, or the amount of sugar that mills are able to extract from sugarcane.

Traditionally SAPs are much higher than FRPs, and, at times, also result in losses for sugar mills.

TNS