Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi on Wednesday approved the Fair and Remunerative Price (FRP) of sugarcane for sugar season 2021-22 (October – September) at Rs. 290 per quintal, an increase of Rs 5 from 2020-21, for a basic recovery rate of 10 per cent, providing a premium of Rs. 2.90 per quintal for each 0.1% increase in recovery over and above 10%, and reduction in FRP by Rs. 2.90 per quintal for every 0.1% decrease in recovery. There has been no deduction in the case of sugar mills where recovery is below 9.5%. Such farmers will get Rs. 275.50 per quintal for sugarcane in ensuing sugar season 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 has been estimated at Rs. 155 per quintal.
According to the Government of India, in the current sugar season 2020-21, about 2,976 lakh tonnes of sugarcane worth Rs. 91,000 cr was purchased by sugar mills. Keeping the expected increase in the production of sugarcane in the ensuing sugar season 2021-22, about 3,088 lakh tonnes of sugarcane is likely to be purchased by sugar mills. The total remittance to the sugarcane farmers would be about Rs. 100,000 crore.
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The Fair and Remunerative Price approved shall be applicable for purchase of sugarcane from the farmers in the sugar season 2021-22 (starting w.e.f. 1st October, 2021) by sugar mills. The sugar sector is an important agro-based sector that impacts livelihood.
The FRP has been determined on the basis of recommendations of the Commission for Agricultural Costs and Prices (CACP) and after consultation with state governments and other stakeholders.
In the last three sugar seasons 2017-18, 2018-19 &and2019-20, about 6.2 Lakh Metric Tonne (LMT), 38 LMT and 59.60 LMT of sugar has been exported. 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 of 23.8.2021. The export of sugar has improved liquidity of sugar mills enabling them to clear cane price dues of farmers.
Ethanol blended petrol
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. In the last two sugar seasons 2018-19 and 2019-20, about 3.37 LMT and 9.26 LMT of sugar have been diverted to ethanol. In the current sugar season 2020-21, more than 20 LMT is likely to be diverted. In the ensuing sugar season 2021-22, about 35 LMT of sugar is estimated to be diverted and by 2024-25 about 60 LMT of sugar is targeted to be diverted to ethanol, which would address the problem of excess sugarcane as well as delayed payment issue because farmers would get timely payment.
According to the Government of India, in past three sugar seasons about Rs. 22,000 crore revenue was generated by sugar mills and distilleries from sale of ethanol to oil marketing companies (OMCs). In the current sugar season 2020-21, about Rs. 15,000 cr revenue is being generated by sugar mills from sale of ethanol to OMCs at 8.5%. This is expected to significantly increase in the next three years as India is planning to go upto 20% blending of ethanol with petrol by 2025.