The Central government has hiked the minimum price that sugar mills must pay to cane farmers by ₹5 a quintal, setting the fair and remunerative price (FRP) at ₹290 a quintal for the 2021-22 sugar season, which runs from October to September. Despite demands from sugar mills, however, the Centre refused to hike the minimum price that they can sell processed sugar, citing consumer interests.
Wednesday’s decision by the Union Cabinet comes a day after Punjab cane farmers wrested an additional ₹35 a quintal price hike from their government, and amidst demands from Uttar Pradesh farmers for a similar hike after three consecutive years of unchanged rates. Both the States go to the polls next year.
The ₹290 a quintal national FRP will apply for a recovery rate of 10%.
“The decision will benefit five crore sugarcane farmers and their dependents as well as five lakh workers employed by sugar mills and related industries,” said Food Minister Piyush Goyal, at a press conference after the meeting. This was the highest ever FRP so far, he noted. The Centre had hiked FRPs by 38% since the ₹210, a quintal rate of 2013-14. He pointed out that this year’s hike was only half of the ₹10 increase seen last year.
Sugar mills welcomed the decision as “quite reasonable”, but demanded that the minimum selling prices (MSP) also be hiked. “The MSP of sugar has remained static for over 30 months, even though the cane FRP was increased by ₹10/quintal in 2020-21 SS,” said a statement from Abinash Varma, director-general of the Indian Sugar Mills Association, seeking a hike from the current MSP of ₹31 a kg to ₹34.50 or ₹35.
However, Mr. Goyal made it clear the Centre had no intention of increasing the MSP at this time, arguing that the mills received government support for exports as well as to divert surplus sugar to ethanol production. “The delicate balance of the interest of farmers and consumers, as well as the industry, has been maintained in this decision,” he said.
Mr. Goyal also addressed the problem of late payment of dues to cane farmers, which is a thorny political issue, especially in western Uttar Pradesh’s sugar belt, noting that ₹91,000 crores was being paid to the farmers in the current sugar season. The payout for 2021-2022 was expected to cross ₹1 lakh. The largest sugar producer, U.P., had also managed to clear all pending dues till 2019-20, and had paid out ₹27,000 crores for the current season until August 14, he observed. Most major sugar-producing states have set their own cane prices over and above the national FRP and a sore point for the U.P. farmers had been that the State had not hiked its price of ₹315 a quintal for the last three years. Over the last week, Punjab’s cane farmers took to the streets, agitating for an increase in the State price, and negotiated a ₹50 a quintal hike to ₹360.