New Delhi: The government will consider on Thursday a proposal to increase the sugarcane price that mills are required to pay to farmers by Rs 40 to Rs 210 per quintal for the year starting October 2013.
The Fair and Remunerative Price (FRP), the minimum price that sugarcane farmers are legally guaranteed, was at Rs 170 per quintal in the 2012-13 marketing year (October-September).
"The Cabinet Committee on Economic Affairs (CCEA) is scheduled to meet tomorrow. The FRP of sugarcane for 2013-14 is on the agenda list," a source said.
The proposal moved by the food ministry is in line with the recommendation of the Commission for Agricultural Costs and Prices (CACP) that suggested Rs 40 increase in the FRP at Rs 210 per quintal for 2013-14.
"The food ministry has accepted the CACP's suggestion. The proposal will be considered tomorrow," sources said.
The CACP is a statutory body and advises the government on the pricing policy for major farm produce.
The FRP is the sugarcane price fixed by the Centre but there are some states like Uttar Pradesh and Tamil Nadu which announce their own rate called state advisory price (SAP). The SAP is much more than the FRP.
The FRP is linked to a basic recovery rate of 9.5 percent, subject to a premium of Rs 1.46 for every 0.1 percentage point increase in recovery above 9.5%. The recovery rate is the quantity of sugar that is produced from the crushed cane.
Usually, the government accepts the cane price recommended by the CACP.
India, the world's second largest sugar producer, is expected to produce 24 million tonnes in 2012-13, lower than 26 million tonnes achieved in the last year. The production is likely to be sufficient to meet the domestic demand of 22 million tonnes.